This past week BrightLocal released their SMB Internet Marketing Survey 2014. The survey was conducted in October and November 2014 with businesses between 1-50 employees. 736 respondents completed the survey. Some of the key takeaways for me are:
1. 37% of SMBs plan to spend more on Internet marketing in 2015
2. 32% say Internet marketing is ‘very effective’ at attracting customers
3. 31% say phone calls are the most valued success metric
4. 35% are contacted every day by SEO companies
In the survey, BrightLocal also looked at Internet marketing effectiveness with 75% of businesses reporting their Internet marketing as being Effective or Very Effective. Below is the actual distribution by answer segment.
The survey was very much skewed to the Small Business with companies under 11 employees representing 84% of respondents and only 3% of companies responding with 50 or more employees. I believe this lead directly to the results below showing that 96% of respondents spend less than $5,000 per month on Internet marketing.
If each of the respondents allocated 5% of sales to Internet marketing, this would place 95% of the respondents at less than $1.2mm in annual revenue. Interesting results but it would be far more interesting to see a more normal distribution of business sizes represented. In 2008 the United States Census Bureau reports that only 10.7% of all businesses had less than 20 employees yet this group makes up around 90% of survey respondents.
So what should your business budget for Internet marketing in 2015?
We see that small businesses (<1mm in revenue) might only spend 2% of sales on marketing. These business rely heavily on word of mouth and networking by the owner, principal, CEO, etc. Businesses that have grown beyond the founders personal network, what we call organic growth, find themselves moving towards a more proactive growth model. These companies will regularly spend anywhere between 9-12% of sales on marketing and fast growth companies can spend 30-50% of sales on marketing.
Think of marketing as a capital investment similar to a manufacturer buying a new machine or a building. When a 3D printing manufacturer invests 500k in a new printer, they are investing in future growth and a future payback. Likewise when a rapidly growing company invests 30-50% of sales in marketing, they are investing in future visibility, brand awareness and sales understanding that the investment may likely require a multi-year payback.
When it comes to your own budgeting, start small and grow with results. Within Internet marketing, are countless possibilities of where to invest and new opportunities each year. AdWords, DoubleClick, Facebook, Twitter, LinkedIn, Retarketing, Email, Social Listening, Content, Lead Tracking, Lead Nurturing, the list goes on and on and every outlet isn’t well suited to every business. So start small, measure results and invest more in the areas that work while keeping a portion of budget to explore new areas each year.