SMEs Most Likely to Adopt Internet Marketing Are Newer Businesses, ‘Tech-Forward’ Organizations or Direct Mail Marketers

New Kelsey Group report identifies segments of small business that are more inclined to adopt pay-per-click and other forms of online marketing

Friday, 26 November 2004 | Source

In a new report released this week, The Kelsey Group identifies segments of the small and medium-sized enterprise (SME) marketplace that are inclined to adopt Internet marketing. The three segments most likely to include online in their marketing mix are newer businesses, “tech-forward” organizations, and direct mail marketers.

The report, entitled “The Elusive Small Business Advertiser: A Segmentation Analysis,” uses data gathered from several proprietary studies and ongoing SME tracking research conducted by The Kelsey Group to segment and evaluate this critical marketplace.

“People speak of a ‘small-business market,’ yet in essence there is no such thing,” said Neal Polachek, senior vice president, research and consulting, for The Kelsey Group. “While there are common SME characteristics, there is also remarkable diversity. What this report reveals is that there are certain categories of small businesses that are much more likely to adopt online marketing than others.”

In examining all the data using various segmentation approaches, The Kelsey Group determined that there are SMEs that possess certain general characteristics suggesting that they are more likely to adopt performance-based online marketing. The Kelsey Group defines the three key segments as follows:

• Newer (Service) SMEs. Businesses that have been in operation less than 10 years typically generate fewer revenues, but allocate more dollars to marketing. Such businesses are more likely to be interested in and potentially measure the performance of their efforts. In particular, service businesses appear to spend a greater percentage of revenues on marketing than product sellers, and either are or would be interested in measurable advertising vehicles to ensure an efficient return on investment.

• “Tech-Forward” SMEs. These businesses have high-speed Internet access and a Web site. This segment is engaged in utilizing technology to its fullest extent, and shows no signs of relying on traditional advertising and marketing approaches.

• Direct Mail Marketers. The data suggest that the use of direct mail by small-business marketers may be a signal that a business owner is more oriented toward measuring media performance. As such, this group may be more inclined to devote resources to digital media that can show a demonstrable and dependable positive rate of return.

In this report, The Kelsey Group offers a range of analytic and segmentation frameworks, including: employee size/headcount; annual revenues and marketing spend; years in business; market segment/vertical identification; SME advertisers as consumer-users; Yellow Pages spending/marketing; and technology orientation.