Retail SMBs are more poised than their counterparts in other verticals to adopt sophisticated digital advertising and marketing. This is clearly shown by BIA/Kelsey’s Local Commerce Monitor ™ (Wave 18) survey of small businesses.

Retail SMBs are already highly oriented to digital media, with plans to spend 43 percent of their total ad budget on digital media in the next 12 months*. They rank social media marketing, SEM/SEO and email marketing as their top priorities for advertising and promotion in the next 12 months*.

There are multiple signals in the LCM data that we think point to big expansion into digital by Retail SMBs:

— They’re experienced in maintaining customer lists, with 71 percent having maintained a customer list for over a year. With 61 percent of their customer lists  in digital form, they’re well positioned to move into marketing automation services like CRM (where they’re still at a low utilization level of 21 percent).

— They’re big users of ecommerce, with 90 percent reporting ecommerce sales.

— They’re highly satisfied with the mobile advertising they’ve done so far, reporting high ROIs — although usage of mobile advertising and marketing is still modest.

— They’re big on customer loyalty programs, which are used by 43 percent of SMB retailers. Since only 30 percent of these programs have been digitized, we believe this too represents another growth opportunity.

— They’ve registered an interest in many advertising and marketing services, particularly ecommerce services, online satisfaction surveys, email marketing, and online leads management.

In sum, we believe local retailers will be upping their digital game on multiple fronts in the near term. Since they’re such a staple of their communities, this shift will reinforce the broad and rapid digitization of daily life.

*The 12 month period following the Local Commerce Monitor Wave 18 survey, conduced in Q3, 2014.

These were a few of the top-level findings of the latest cut of LCM 18, focusing on SMBs in the Retail vertical. Clients of BIA/Kelsey can access this report through our client portal. The report is also available for purchase, and more information on the LCM survey is here.

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The BIA/Kelsey “Status and Review of Card-Linked Offers, 2015” report, which is based on in-depth interviews with industry leaders, has generated a lot of interest among the various shareholders of card-linked offers and non-advertising marketing solutions (including financial institutions, tech vendors and publishers).

We’re especially interested in the feedback from Thanx CEO Zach Goldstein, who tells us he’d like to see the Card Linked Offer space rebranded as “Card-Linked Services.” The main reason? “There is a lot of value that can be delivered to a consumer by linking their card without receiving and fulfilling an offer,” he says. “In our case, for instance, easier reward accrual for loyalty programs.”

In Goldstein’s view, the report — which is bullish on momentum in the card-linked offer space — could be even more bullish. He’s seeing conversion rates for Thanx campaigns ranging from 22 percent into the low-30 percent range. This is well above the 3 percent to 12 percent conversion rates that we cited as the norm.

Goldstein also takes issue with the report’s conclusion that cashback is the preferred reward type — something that is widely assumed by the financial institutions and related ecosystem, but sometimes disputed by players that focus more on loyalty.

“Many of our merchants would rather sacrifice margin than top-line revenue,” he says. “We actually see far more businesses who like to use card-linked for the ‘accrual’ portion of the experience (tracking spending to qualify) but redeem rewards through a more traditional channel or through mobile.” For more of Goldstein’s views on card linking, click here.

The CardLinx Association, which partnered with us on the report, is going deep on card-linked offers with a great lineup of speakers in New York April 28. We hope to see you there.

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The BIA/Kelsey “Status and Review of Card-Linked Offers, 2015” report, which is based on in-depth interviews with industry leaders, has generated a lot of interest among the various shareholders of card-linked offers and non-advertising marketing solutions (including financial institutions, tech vendors and publishers).

We’re especially interested in the feedback from Thanx CEO Zach Goldstein, who tells us he’d like to see the Card Linked Offer space rebranded as “Card-Linked Services.” The main reason? “There is a lot of value that can be delivered to a consumer by linking their card without receiving and fulfilling an offer,” he says. “In our case, for instance, easier reward accrual for loyalty programs.”

In Goldstein’s view, the report — which is bullish on momentum in the card-linked offer space — could be even more bullish. He’s seeing conversion rates for Thanx campaigns ranging from 22 percent into the low-30 percent range. This is well above the 3 percent to 12 percent conversion rates that we cited as the norm.

Goldstein also takes issue with the report’s conclusion that cashback is the preferred reward type — something that is widely assumed by the financial institutions and related ecosystem, but sometimes disputed by players that focus more on loyalty.

“Many of our merchants would rather sacrifice margin than top-line revenue,” he says. “We actually see far more businesses who like to use card-linked for the ‘accrual’ portion of the experience (tracking spending to qualify) but redeem rewards through a more traditional channel or through mobile.” For more of Goldstein’s views on card linking, click here.

The CardLinx Association, which partnered with us on the report, is going deep on card-linked offers with a great lineup of speakers in New York April 28. We hope to see you there.

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We’re reporting the Local Commerce Monitor (LCM) results by these slices at the request of our clients. (We also report out the LCM results by many other slices, including “super verticals,” lifecycle stage, spending level, etc.)

The average total spend for advertising and promotions annually among SMBs with 10-99 employees is $53,440. This spending level places this segment of SMBs closer to Plus Spenders and franchise SMBs than to segments of smaller SMBs like the Core Spenders.

The top advertising/marketing priority for SMBs with 10-99 employees for the next 12 months is SEM/SEO. This is consistent with other size brackets, and not surprising considering the steadily increasing importance, and ever-changing rules, of SEO.

Broadly speaking, SMBs in this size range often find themselves straddling the worlds of digital and traditional media. Their media mix puts more weight on classic media, including direct mail, print and Internet Yellow Pages, newspapers and magazines. They’re also loyal to the sales channels attached to these media, even for the purchase of online ads. For example, Print or Internet Yellow Pages is the second most used channel for purchasing online ads, used by 27.5% of respondents.

Service model preference leans strongly towards the “Do it with me” model, preferred by 52.8% of respondents, which is a sharp distinction to the smaller SMBs, which favor the “Do it myself” model.

Customer loyalty programs are popular with these SMBs, with 43.1 percent already having a customer loyalty program, and another 26.8 percent saying they plan to add one in the next 12 months — for a total of 69.9 percent.

Clients of the BIA/Kelsey Advisory Services can find the full report here.

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Recent Sponsored Research from BIA/Kelsey and Manta, based on a survey of members of Manta’s online directory community, uncovered a notable trend: more than ever, SMBs are turning their attention and efforts to customer retention, prioritizing it above even acquisition. BIA/Kelsey and Manta will discuss this paradigm shift and its implications for SMBs in a free webinar on Thursday, May 15. Follow this link to register.

It’s a sensible shift, as acquiring customers is typically much more costly than retainer existing ones. Plus, a five percent increase in customer retention can lead to a 25-100 percent rise in profits (source: “The Loyalty Effect”).

Still, SMBs historically have devoted more time, energy and out-of-pocket resources to acquisition. Until now. In the survey, 61 percent of SMBs reported that more than half of their revenue comes from repeat customers, and only 14 percent spend the majority of their annual marketing budget on acquisition.

Change is afoot, starting with the recognition that existing customers are fruitful ones. However, marketing to and engaging with them effectively remains a trouble spot, particularly on digital platforms. Survey findings show that only 34 percent of SMB owners maintain any loyalty program at all, and of those who do, the majority are offline, thus failing to take advantage of the efficiencies and insights that digital platforms provide.

How can SMBs take better advantage of digital platforms to connect with their best customers? Join the webinar on May 15, where BIA/Kelsey and Manta will share tips and best practices to jumpstart the SMB loyalty movement.

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Smartphones are becoming increasingly more involved in the shopping process with a lot of technology coming out that is slowly starting to enable smartphones to replace credit cards, loyalty cards and much more. When asked about the use of smartphone scanned code loyalty programs, 27.2% of men were a part of loyalty programs that allowed them to register their purchases in this way while only 16.6% of women were part of one. Men are also twice as likely to have a digital wallet than women and 38.7% of men who use a smartphone when shopping locally have occasionally or often used a smartphone to scan a bar-code.

Not only are men quicker to adopt new functions for their mobile device in-terms of shopping locally than women, but those who use their mobile devices for shopping locally do so more frequently. Of the male respondents, 36.4% use tablets for local shopping once a day (or more) compared to only 29.0% of women and 43.1% of men use smartphones once a day (or more) compared to only 38.0% of women.

Want to know more about advertising to male vs. female consumers? Stay tuned for more details on BIA/Kelsey’s upcoming spotlight deck about our gender specific findings from our Consumer Commerce Monitor.

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The utility of loyalty programs is stronger than ever, as they help businesses connect, engage, drive traffic, refer friends, purchase and track customer actions. But efforts to determine loyalty aren’t made easier with all the noise in the system.

Usage is coming in from all over the place (phones, tablets, social networks, reviews, etc.). And while new efforts can be enhanced by tapping into Point of Sale systems, hundreds of these aren’t compatible with each other.

“The wheels are coming off” for loyalty programs, notes PunchTab CEO Ranjith Kumaran. In fact, the evolution of loyalty channels has been moving so fast that PunchTab recently received an RFP from a major Consumer Packaged Goods company that specifically ruled out any comprehensive loyalty solutions. “They didn’t want to be locked into an inflexible system for several years,” says Kumaran.

PunchTab has been in development for three years. The Palo Alto-based company, which currently supports 17,000 loyalty campaigns, has raised $5.3 Million. Its whole effort is to track everything. The company is currently tracking 40 different loyalty-related activities.

“It is risky to build a program around a single channel,” Kumaran says. Eighteen months ago, that channel might have been Pinterest, he notes. Now the interest in Pinterest is “quieter.”

PunchTab’s approach is to incorporate information from multiple sources, such as FourSquare check-ins, or POS systems, or digital receipts. But mostly, the company focuses on workarounds that enable as much flexibility as possible.

One quick service example that PunchTab is working with is Arby’s Restaurant Group. Arby’s didn’t think it could do a loyalty program because it is working with 50 different types of POS systems. But PunchTab created a solution that focused on in store traffic data, allowing to identify tens of thousands of potential customers for a new product that it rolled out.

Looking forward, Kumaran is looking at the whole new range of channels that are expected to come on the scene. “Wearables,” such as smart watches and FIT bands, add a whole new set of data that can determine loyalty factors, he said.

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First Data’s Senior VP Dom Morea provided a set of important insights into the next generation of marketing services to small and medium businesses (SMBs) at BIA/Kelsey’s 2013 SMB Digital Marketing conference, saying these may be more about “commerce” than “advertising.” Using payments as an anchor, these “transaction marketing” services include deals, coupons, loyalty services and CRM/analytics. First Data is the giant processor of 55 percent of U.S. transactions, is aggressively pursuing this rapidly exploding space.

Morea stated that their research shows 82% of consumers want to have a seamless online/offline shopping experience. Over half (57%) start their journey to purchase either online or offline but want to finish their journey easily on the other side (i.e., starting online but ending offline for the final purchase). About four-fifths (81%) of consumers carry two or more loyalty cards and 40% want these to be personalized to them by providing tailored ads or offers.

For SMBs this creates quite a challenge. Providing simple, compelling loyalty programs that allow the consumer to seamlessly bridge their online and offline steps in their journey to purchase is not something they can do themselves. Morea provided a compelling case study of one SMB whose challenge it was to move away from costly plastic loyalty cards that had limited success in driving customer engagement to something that would work better. First Data’s solution was their Offerwise card-linked program that enables paperless redemption for offer providers, merchants, and consumers.

The result was that the SMB was able to learn more about the customer by tying in more data in an integrated view and the program drove up to 85% activation rates, much higher than the previous solution. The integrated data view allowed the SMB to leverage consumer analytics to personalize content and complete a multichannel experience.

Morea said the next frontier in transactional marketing involves rethinking mobile; leverage the cloud to integrate disparate parts of the process; and emerging privacy and security standards.

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Declaring that deals have officially “jumped the shark” could well be an overstatement, considering that revenues are still on the uptick (BIA/Kelsey forecasts that the U.S. market will grow to $5.5 billion by 2016) and hundreds of companies continue to invest in the channel. However, the broad deals market is clearly evolving and segmenting in new ways, a topic explored during an ILM West superforum.

Merchant loyalty programs are seen as the next “white space.” BIA/Kelsey estimates that independent loyalty and transaction-based platforms have raked in $222 million in investment capital since 2008. One early leader is Five Stars, which CEO Victor Ho says will integrate with 95 percent of point-of-sale systems (a major value proposition, if true, in the fragmented POS landscape). Through the card issued to merchants across Five Stars’ network, participating businesses can see all transactions that go through “down to the line item.” There are integrated marketing components as well, with auto-posting to Facebook and e-mail and SMS campaigns driven by the transaction data.

Perry Evans at Closely is working on a full SMB dashboard product that includes promotions, loyalty and competitive intelligence. The latest rollout, Perch, gives a “birds-eye view of what’s happening in your marketplace,” showing a live feed of how a business and its competitors are posting and engaging across several social networks and local sites (Yelp, Twitter, Facebook, Foursquare and others). This starting point provides SMBs with a “frame of reference for their participation” through promotions, offers and other forms of customer contact.

Following the adage “what’s old is new again,” another sector seeing uptake as the luster of deals subsides is online couponing. DataSphere SVP Gary Cowan calls coupons ‘deals’ before there were deals, and positioned them as a strong option because the content is the ad and exists down in the decision funnel.

Valpak, which has long controlled massive volumes of rich local coupon content through its well-known direct mail brand, is now pushing this asset progressively across platforms with several mobile initiatives, including Apple Passbook integration. What was once a traditional direct mail company is now “transforming into multi-media distribution,” according to President Michael Vivio. Meanwhile, Valpak’s acquisition of Savings.com layers national coupons on top of its existing local content assets.

But don’t forget about deals. The original “daily deal,” with its massive discounts and huge margin splits, is evolving into more merchant-friendly models. Constant Contact’s SaveLocal, for instance, gives merchants full control over their deals and only collects a couple of dollars, says GM Dave Gilbertson. Meanwhile, with inevitable market consolidation and sales force contraction (e.g., Groupon pulling feet-on-street sellers to manage costs), Second Street President Matt Coen sees benefits for media companies with brand advantages that can offer full, long-term solutions. “Those that diversify will be strongest.”

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