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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To be certain, the 2-9 employee bracket is quite interesting because it often represents a stage of development in which the SMB is deciding what it wants to be when it grows up, so to speak. This is a point at which some SMBs decide they’ll style themselves as a “lifestyle” business, and won’t focus on growth as much as on providing a high-quality lifestyle for the owner. On the other hand, other SMBs will decide to adopt a growth trajectory to become a significant player in their niche.

This “pre-teen” period for many of the SMBs in the 2-9 employee bracket poses unique challenges — and rewards — for service providers. For example:

– These SMBs use a fairly broad mix of media, and are applying increasingly-sophisticated analytics to assess media performance and make budget allocation decisions. Accordingly, they’re probably receptive to tools and platforms to grow their analytic capabilities.

– Over the next 12 months, 43.6 percent rate SEM/SEO as a “very high” or “extremely high” priority, suggesting they may be open to various tools (and learning) to master these activities.

– Email marketing also ranks fairly high both as a medium currently being used, and as a priority, again suggesting this may be a product area with a lot of interest for SMBs in this size bracket.

In sum, for many SMBs in the 2-9 employee bracket, this is the stage at which long-term relationships are formed — with media, products, platforms, channels and vendors. An important segment to pay attention to!

Clients of the BIA/Kelsey Advisory Services can find the full 2-9 employee spotlight report here. This report is one of a series of drill-down reports on the findings from Wave 18 of BIA/Kelsey’s Local Commerce Monitor survey of small-and-medium businesses. In the coming weeks we will be looking at even larger SMBs with between 10-99 employees, new SMBs, established and growing SMBs, and more. To learn more about our LCM survey, click here.

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Home and Trade Services SMBs report their most popular channels to use are from traditional media: newspapers, print yellow pages and direct mail. Digital is also part of the Top 5 most used with Facebook pages and a website rounding it out. Given the vertical’s heavy reliance on traditional media, there’s an opportunity for traditional media players to bundle digital media to their offerings.

Home and Trade Services is the only vertical industry in our study with print yellow pages among the Top 5 media used for advertising and promotion, and was only in the Top 10 of one other vertical — Professional Services. Print yellow pages also had the highest return on investment (ROI) of the top three traditional media — with nearly 28% saying that their ROI on print yellow pages was either excellent (10-19x) or extraordinary (over 20x) spend.

SMBs in the Home and Trade Vertical had an average annual advertising spend of $12,573 in Wave 18 (Q3/2014), down from $19,238 in the previous wave (Q3/2013). Home and Trade Service SMBs overall will not increase their ad budget in 2015. Nearly 61% of the SMBs in the Home and Trade Services vertical reported that they would maintain their ad spend over the next 12 months and 20.8% say they will increase. While SMBs in the Home and Trade Services utilize traditional media, their budget allocation for digital is increasing. On average, SMBs in the Home and Trade Services vertical allocated 24.7% of their advertising budget to digital in the last 12 months. Over the next 12 months, they report plans to increase it to 27.7%.

Local media players, especially in the traditional channels, have an opportunity to continue to serve their Home and Trade Services SMBs through traditional channels as well as grabbing more of their ad dollars by offering digital products.

Clients of the BIA/Kelsey Advisory Services can find the full Home and Trade Services vertical report here. Interested in finding out more about our LCM survey? Click here.

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Ever get that “grass is greener” feeling that your digital media competitors may have a leg up on you in how their organize and run their advertising operations? Here’s a chance to find out how you compare.

Operative is running an online survey of publishers with partners MediaPost and Digital Context Next (formerly the Online Publishers Association) to get at questions around the profitability and efficiency of their digital media business. Participants in the survey will receive a free copy of the research report on February 25, 2015. The survey questions explore publishers’ current and planned sales operations size, make-up, ad stack technology platforms, typical CPM rates, revenue structure and profitability.

The goal of the survey partners is to provide some benchmark data to assist industry players to make better assessments both about their own operations and how they compare to others in digital media.

We look forward to seeing the results and offering some of our own insights and data around this topic when the report is released.

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As we prepare for our annual September conference (watch out, New Orleans) we are starting to release the data from our Wave 18 Local Commerce Monitor (LCM) survey, just “in from the field” a few weeks ago.

The data we released Monday morning (which BTW you may have heard on the Wall Street Journal morning broadcast, or seen in the industry press) focused on our new findings about the use of social media by SMBs.

According to our new findings, three-quarters (74.5%) of SMBs in our survey reported using social media to advertise or promote their business. This represents the largest reach of any media category.

Not only does social media get the #1 rank for reach, but for the first time, social media also gets the #1 rank for share of media spend by SMBs. LCM respondents reported that 21.4% of their total media spending in the past 12 months went to social media, more than to any other media category. (The LCM survey covers 10 different top-level media categories, of which the social media category contains 11 different social media and platforms.)

This is a “double first” for social media, in which social media has achieved the highest reach and greatest spend of all media categories. This is something we haven’t seen before, and represents a key milestone in the history of SMB media spending.

Not surprisingly, Facebook had the strongest showing within the social media category, with 55.1% of respondents reporting they have a Facebook page for business use. At the same time, strong showings by other social platforms demonstrated that the strength in the social space is disbursed across multiple players. The other social platforms that beat our expectations for reach and/or spend include LinkedIn, Pinterest, Instagram, and Twitter’s promoted tweets product.

Additional data from the LCM survey will be provided at our upcoming LEADING IN LOCAL: SMB Digital Marketing Conference, and to BIA/Kelsey clients throughout the year.

About our LCM survey: We’ve run the LCM survey since 1999. Wave 18, just completed, had a total of 546 respondents, consisting of two sub-groups of small and large SMB spenders. The metrics reported above represent averages for the two sub-groups. The survey sample consists a broad cross-section of US SMBs, diversified by category, geography, size and market type. The survey is conducted online by our research partner Ipsos.

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Is Apple getting into the mobile payments space? I don’t mean for digital goods, such as songs and other virtual goods, which it already sells on mobile devices through iTunes, but rather for physical goods in the offline world. CEO Tim Cook alluded to the idea during Apple’s first quarter Fiscal Year 2014 earnings call on January 27. Although he declined to speak about Apple’s plans in the space he did have the following to say:

“We’re seeing that people love being able to buy content, whether it’s music or movies or books, from their iPhone, using Touch ID. It’s incredibly simple and easy and elegant, and it’s clear that there’s a lot of opportunity there. The mobile payments area in general is one that we’ve been intrigued with, and that was one of the thoughts behind Touch ID. But we’re not limiting ourselves just to that. So I don’t have anything specific to announce today, but you can tell by looking at the demographics of our customers and the amount of commerce that goes through iOS devices versus the competition that it’s a big opportunity on the platform.”

BIA/Kelsey’s Mike Boland predicted back in late 2011 and again last January that Apple would join the mobile commerce universe by turning mobile devices into portable POS (point of sale) systems… similar to what it did with its Apple Store app, which enables consumers to use their devices to scan a barcode in an item in the Apple Store and pay for it via their iTunes account.

The analysts at BIA/Kelsey have written several posts about the use of mobile card readers in general and about Square in particular. But, the mobile payment space that Apple is contemplating entering, according to Boland, is not the same space occupied by companies like Square and Stripe, with their mobile credit card readers. A better comparison would be to companies with digital wallets, such as Google and Paypal.

But will consumers welcome Apple’s entry to mobile payments? In 2013, BIA/Kelsey surveyed consumers about many of the same topics, including mobile payments and online wallets, in the Consumer Commerce Monitor™ (CCM) survey. Although we didn’t ask about Apple, digital wallets in general were met with a healthy dose of skepticism by the full sample of consumers. Of the 2,000 consumers surveyed, 8% already had a digital wallet and another 8% were interested in getting one. But more than half of those surveyed, 54%, were either not very interested or absolutely did not want one.

There is greater interest in digital wallets among smartphone users, with 11.9% already having one, 13.9% wanting to get one, and only 40.6% not very interested or don’t want at all.

When you look at the breakout by age group, it is not surprising to discover that the younger demographics are far more interested in digital wallets than the older demographics.

— 18-24 year olds: 14.4% have, 13.2% want to get one, 42% are not very interested/don’t want.

— 25-34 year olds: 18.6% have, 10.2% want to get one, 37.5% are not very interested/don’t want.

— 35-44 year olds: 8.5% have, 13% want to get one, 46.0% are not very interested/don’t want.

— 45-54 year olds: 4.5% have, 6.0% want to get one, 58.7% are not very interested/don’t want.

— 55-64 year olds: 0.8% have, 4.4% want to get one, 62.2% are not very interested/don’t want.

— 65+ year olds: 2.4% have, 3.5% want to get one, 74% are not very interested/don’t want.

So will consumers welcome Apple’s version of a digital wallet? Unlike some other mobile payments companies, Apple wouldn’t be starting from scratch, as it already has a built in audience for a mobile payments platform with over 500 million iTunes customers.

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Of the different media used for advertising and promotion that BIA/Kelsey tracks in the LCM survey, only two of the traditional media crack SMB’s top 10 most used media for advertising and promotion: newspapers and direct mail. The rest of the top 10 are filled with digital media.

In the chart below, I looked at eight of the traditional media from LCM. Newspapers and direct mail, the only two of the traditional media to crack the Top 10 most used media list, fall first and second among traditional media. Radio comes in third, with TV and outdoor bringing up the rear for usage.

But how do SMBs perceive the return on their investment for time spent in advertising or promoting themselves on traditional media? The traditional media with the highest usage, newspapers, had the lowest perceived ROI, while the ones with lower usage: TV, cable and outdoor, had the highest ROI among the traditional media.

TV had the highest perceived ROI among the traditional media, with 50% of SMBs rating it as either excellent (10-19 times return on that investment) or extraordinary (over 20 times the return), while only 13.7% of SMBs surveyed reporting using TV to advertise or promote their business.

Newspapers, which had the highest usage among the traditional media, had the lowest perceived ROI, with 26% of SMBs reporting returns as excellent or extraordinary.

Radio had the third highest usage among SMBs for advertising/promotion. But advertisers who used radio as part of their advertising mix reported being pleased with the results, as 36% rated the perceived ROI of radio advertising as either excellent or extraordinary.

For the first time in several survey waves, SMBs indicated that they are actually decreasing the number of media used to advertise or promote their business. The implication: media must deliver concrete ROI or risk losing business traction. Digital media penetration with SMBs has increased, as many of these solutions generate concrete leads and offer trackable ROI metrics.

Traditional media are far from obsolete, however, as the data suggests, and many are still well-regarded. However, for newspapers in particular, and all traditional media, as SMBs enjoy more digital options and demand clear value from their advertising spend, the need to produce clear ROI is stronger than ever.

More information about LCM and custom renderings of the data can be found here.

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37.1% of consumers used a smartphone for local online shopping and 19.4% used a tablet, according to BIA/Kelsey’s Consumer Commerce Monitor (CCM) survey. SMBs are well positioned to take advantage, with 32% of SMBs reporting they use some form of mobile advertising to promote their business, up from 28% in 2012 according to BIA/Kelsey’s Local Commerce Monitor (LCM) survey.

In BIA/Kelsey’s annual Local Commerce Monitor (LCM) survey on advertising and marketing of small and medium businesses (SMBs), we asked several questions on the satisfaction of the various advertising and marketing choices made. In our new Consumer Commerce Monitor survey, we asked consumers how they find, engage and transact with local-serving businesses, including where they use their mobile devices. For the consumers who use tablets for local shopping, the majority, 90%, do some from home, 21% do so at work, and 17% do so in-store. One-third of tablet users reported using their devices at least once a day for local shopping, with nearly another third using them a few times a week.

Consumers using smartphones, on the other hand, report being far more likely to use their devices for local shopping while out in the world. Nearly 68% reported using their smartphones for local shopping while in store. Nearly 82% of consumers reported using their smartphones at home for local shopping, while 49% use their devices at work. More than 40% of smartphone users reported using their devices at least once a day for local shopping.

One of mobile’s path to success for the small business can be found in payments. SMBs are ready to close the loop with shoppers who use their mobile phones; 40% of SMBs reported accepting payments at the point of sale with a mobile credit card reader attached to a smartphone or tablet, with an additional 16% planning to add this capability in the next 12 months. This in line with consumers’ adoption of mobile payment with 42% of consumers reported having made a payment using a smartphone credit card swipe in the past six months, with over 7% reporting they do so often.

As their customers are using mobile devices such as smartphones and tablets to shop online, SMBs reported going increasingly mobile. 16% of SMBs surveyed reported that mobile was an extremely high future marketing priority for them, and another 21% reported it was a very high priority.

SMBs are still working on success with mobile, but need guidance on effective marketing opportunities.

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Social media can provide SMBs with an immediate and interactive connection with their customers. So how do SMBs perceive the return on their investment for time spent in advertising or promoting themselves on social media?

In BIA/Kelsey’s annual Local Commerce Monitor™ (LCM) survey on advertising and marketing of small and medium businesses (SMBs), we asked several questions on the satisfaction of the various advertising and marketing choices made. It should be noted that only SMBs who reported using a particular media were asked for their ROI assessment of that media.

While only 15.5% of SMBs surveyed reported using Facebook ads to advertise and promote their business, they gave it the highest combined ROI of Excellent (10-19x spend) and Extraordinary (more than 20x spend) of the social media in the survey, at 45.4%. Blogs, which 19.0% of SMBs surveyed reported using for advertising and promotion, had the second highest combined ROI at 37.0%. Video on YouTube and Facebook Pages were a close third and fourth, with 34.6% and 34.1%, respectively. LinkedIn and Twitter, which were second and fourth among SMB users, were ranked lowest two of the social media, with combined perceived ROI of 31.1% and 23.9%, respectively.

But where do these social media rank in usage by SMB of the 44 of the media channels in the survey? Facebook ads ranked No. 5 in media used for advertising and promotion overall. Blogs came in at No. 16. Video on Youtube and Facebook Pages were ranked Nos. 21 and 22, respectively. Twitter was 31st, with LinkedIn coming in next to last in 43rd place.

LinkedIn and Twitter are still relatively new channels for many SMBs, so there still may be some learning curve there. Especially for Twitter, which has a unique language and set of conventions and hasn’t also been seen as especially business-friendly. One reason Facebook ads perceived ROI is higher is SMBs ability to track their campaign spending and toggle performance, as opposed to “owned media” channels such as Facebook Page, Twitter and LinkedIn, where tracking and measurement can be more nebulous.

In comparison to a year ago, seven of the eight social media showed improvement in perceived ROI from Wave 16 of the LCM survey, 3rd Quarter 2012. Twitter was the fastest growing social media channel year-over-year, at 24.4% for Excellent/Extraordinary perceived ROI. Facebook ads were a close second, with 23.7% year-over-year growth. Facebook pages showed 16.0% year-over-year growth in perceived ROI.

ROI is improving year-over-year for social media, but there’s still ample room to optimize effectiveness. Again, many of these channels are still relatively new (especially when compared to very familiar traditional media), and measurement standards and best practices are still being fashioned.

For more about SMB’s use of Twitter in advertising and promotion, check out this blog post.

Interested in learning more about Local Commerce Monitor Wave 17™ or getting a custom cut for your business? Check out BIA/Kelsey’s LCM page.

We’ll be covering this and other themes in greater depth at our upcoming conference, Leading in Local: Interactive Local Media, December 10-12 in San Francisco. Be there and join the conversation.

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Twitter is just one of the many online and offline media that BIA/Kelsey tracks in the latest wave of the Local Commerce Monitor™ (LCM). LCM is BIA/Kelsey’s long-running study of how U.S. SMB advertisers are evolving their use of media to acquire and retain customers.

SMBs perceived ROI (return on investment) for Twitter has increased over the past three years. As shown in the chart below, in Wave 17 nearly a third of SMBs surveyed rated Twitter’s ROI as Excellent (10-19x Spend) or Extraordinary (Over 20x Spend), compared to 25% in Wave 16, and 17.1% in Wave 15.

Twitter isn’t the only social media to show growth in SMB perceived ROI from Wave 15. Facebook pages have also been growing since Wave 15 (2011). In Wave 15, 23.1% of Excellent (10-19x Spend) or Extraordinary (Over 20x Spend), which grew to 29.4% in Wave 16, and 34.1% in Wave 17.

Other points about SMBs and Twitter:

• Wave 17, 25.7% of SMBs surveyed rated the quality of lead sources from Twitter as Good or Excellent, compared to 22.8% in Wave 16.
• In Wave 17, nearly 34% of SMBs surveyed said they currently have Twitter accounts, and another 42% are planning to add it.
• 47% of SMBs with Twitter report updating it daily, while 31% update weekly, in Wave 17.

Interested in learning more about LCM Wave 17 or getting a custom cut for your business? Check out BIA/Kelsey’s LCM page.

We’ll be covering this and other themes in great depth at our upcoming conference, Leading in Local: Interactive Local Media, December 10-12 in San Francisco. Be there and join the conversation!

If you are looking for more information on Twitter’s recent IPO, try Jed Williams’ blog post “Twitter’s IPO: What Are 140 Characters Really Worth?”

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