Small Business Search Spending Rises, Report Finds

A report from local search and marketing specialist WebVisible finds cost-conscious businesses are spending on Web search marketing.

In what may be a sign that economic recovery is taking hold, at least in the small business sector, midmarket businesses are spending more on search and achieving greater success in converting their leads into Website actions, according to the latest quarterly report from WebVisible, a provider of local online marketing products and services. According to the report, the average small business advertiser spent $2,149 on search advertising in the fourth quarter of 2009, an increase of 30 percent over the third quarter of  2009 and 111 percent over the fourth quarter of 2008.

In addition, conversion rates improved for small-business advertisers, with 35.3 percent of clicks resulting in Website conversion action-compared with 32 percent in Q3 2009 and 26.6 percent in Q4 2008. Actions are predominantly calls, but also include sending e-mails or SMS texts, form fills, printed driving directions, or video views. Video capability was the fastest-growing Website feature for small-business advertisers over the past year, with 19 percent of advertisers showing video on their Websites in Q4 2009, versus just 5 percent in Q4 2008.

These were among the top findings of the second installment of "The WebVisible Report: State of Small Business Online Advertising Q4 2009," which examines trends among WebVisible's U.S. advertisers from Q4 2008 through Q4 2009. The data represents nearly $22 million in U.S. small-business advertiser spending in Q4 2009 from more than 12,000 individual advertisers. The report also analyzed Q4 2009 data from more than 10,000 advertisers in the United Kingdom.

"These numbers show increased confidence by small businesses in using search to gain leads-and increased ability to turn those leads into sales," said WebVisible CEO Kirsten Mangers. "We get better every day at managing the businesses' content to increase conversion and enhance their advertising presence so they'll benefit from lower costs overall."

The average keyword count per small-business advertiser increased by 21 percent in Q4 2009 over Q3 2009, to an average 67 keywords, though the report noted click-through rates (CTR) and cost-per-click (CPC) did not change significantly on the search engines on a quarter-over-quarter basis. Bing, Microsoft's search engine, maintained the highest CTR, while Google maintained the highest CPC. The share of spending was unchanged on Yahoo and Bing in Q4 2009. Some spend was shifted from Google to Ask, as advertiser resellers sought lower-cost sources of traffic.

"Another key is knowing the most cost-effective place to spend those ad dollars," Mangers said. "For example, Bing has higher click-through rates and lower costs-per-click than Google, so it's often a better buy. We're also continuing to monitor how the merging of Bing and Yahoo will affect small-business advertisers. It's entirely possible Yahoo's click-through rates could rise as a result."

Effective with the Q4 2009 study, WebVisible has begun analyzing the spending among different types and sizes of small businesses. The company segmented advertisers into five distinct groups based upon their organizational maturity and advertising propensities: part-timers, soloists, entrepreneurs, small business generalists and small business managers. Mangers said, in general, the newer a business is, the less it spends on advertising, while advertisers with well-established businesses-five or more employees and in business for five or more years-tend to spend more on advertising.

"In most reports and trend stories, all small businesses get lumped into the same category," said Mangers. "But a solo entrepreneur running his architecture business in the evenings is not going to have a lot in common with a 10-person hair salon or a three-location local restaurant chain. We'll continue to monitor the trends and mine our wealth of data for deeper insights into these segments of small-business advertisers. And we are cheered, overall, by what this indicator may suggest about the overall health of the SMB sector."