Smartphones, Facebook Drive Small-Business Marketing: Citibank

Many small businesses plan to use digital and social media tools in the coming year, as well as tablets and smartphones.

Small businesses are increasing their use of the Internet and social media platforms to connect with customers and grow their businesses, according to a recent survey by Citibank. The study found that 65 percent of the 749 small-business owners surveyed across the United States cited increased marketing activities as a key step in growing their businesses. The survey also found that smartphones ranked as the best technological solution for small businesses, with nearly half (48 percent) currently using smartphones like the iPhone or Android-powered devices.

While the large majority (70 percent) of respondents used their company Website as a marketing channel, 41 percent said they have used social media channels, such as LinkedIn, Facebook and Twitter, in the last year. Sixty-two percent haven't used email for marketing purposes€”a figure that remains the same from when Citibank first surveyed small-business leaders about social media and online marketing in April 2010.

As small-business owners are moving online, and relying more heavily on their company Websites, online channels represent an emerging opportunity to help grow their businesses. In fact, many small businesses plan to use digital and social media tools in the coming year. According to the survey, 60 percent plan to increase activity on their Websites for marketing purposes, 40 percent intend to use social networking sites such as Facebook, LinkedIn or Twitter for marketing or expanding their businesses, up 10 points from 2010, and 38 percent plan to leverage email marketing tactics to drive awareness and sales of products and services.

"Although small-business owners have been slower to adopt online marketing channels, they are clearly warming up to using these tools to target customers," said Maria Veltre, managing director of small-business marketing and customer experience at Citi. "They are seeing that social media platforms can be an efficient and cost-effective means to increase awareness of their business, engage with customers and, ultimately, to drive growth."

The number of small businesses selling goods and services online or via email has risen from 16 percent to 24 percent since 2010. The use of social media tools, such as Facebook, Twitter and LinkedIn, rose 6 percentage points during that same time frame. The survey also revealed that nearly three-quarters of small-business owners who have a Website find it very or somewhat effective in generating more business for their company. More than one-third (34 percent) said that they plan to use smartphones in the future. In addition, tablet computers like Apple€™s iPad have penetrated one-quarter of small businesses, and another 23 percent said they planned to use them more or add one in 2012.

Small-business owners under the age of 45 were more likely to use digital and social media to address their marketing needs. In the past 12 months, 54 percent of small-business executives under the age of 45 used social networking sites, such as Facebook, Twitter or LinkedIn, compared with only 36 percent of their peers aged 45 and over. Younger small-business owners were also more likely to use a company Website (72 percent, versus 68 percent of older respondents) and search engine optimization (44 percent, versus 33 percent).

"Today, the Web is the first place consumers go for information on products and services," said Tracey Weber, managing director of Internet and mobile for North America consumer banking at Citi.  "The perception is that these channels are expensive and time-consuming, but the reality is there are simple ways to reach current and prospective customers online. Small businesses have a great opportunity to leverage online tools and social media to market their businesses and to help drive growth."