Small business owners exhibit both a can-do spirit and limitations in marketing expertise and technology adoption. While most are passionate about their businesses, many lack skills in digital marketing and rely on basic approaches like word-of-mouth. They have limited budgets and time for marketing. Today's small business owners are more diverse than in the past, including more women, immigrants, and younger people operating out of necessity. However, most small businesses still have modest marketing budgets and skills, using traditional channels over sophisticated digital strategies. They recognize gaps in their abilities and could benefit from assistance with their websites, social media, and email marketing.

1. Copyright ©2013 eMarketer, Inc. All rights reserved.
Both Can-Do and Can’t-Do 2
How Many They Are, and Who They Are 2
The Rudiments of Small Companies’ Marketing 3
The Technology They Bring to Bear 7
Not Moving Fast to Mobile 8
Trying to Take Advantage of Social Media 9
And Elsewhere in the Digital Mix … 11
Small Businesses as Customers 12
Conclusions 15
eMarketer Interviews 15
Related Links 16
February 2013
Executive Summary: Small-business owners (SBOs) are a diverse bunch that includes more women, immigrants
and young people than one finds atop big corporations. But what many have in common are modest levels of
marketing expertise and technological know-how.
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A large minority of small businesses don’t have their own
website. Rather than pursuing a systematic plan for usage of
digital devices, many rely on employees to “BYOD,” or “bring
your own device.” Money is an obvious constraint on SBOs’
marketing and technology adoption, but time is also a factor
for owners who toil long hours and juggle several roles. They’re
often too busy with their core business activities to have much
time for mastering new technologies. Many have never used
forms of digital marketing (e.g., social and mobile) that are
routine among bigger companies. And their views on how
effective various digital channels are suggest a low comfort
level with them—something companies should consider when
choosing the means by which they market to small businesses.
As it is, small-business owners are unimpressed with the sales
pitches aimed at them, with more than half feeling companies
don’t market to them effectively. But they appreciate it when
potential suppliers provide information that can help them run
their business better.
Key Questions
■■ What is the demographic mix among SBOs?
■■ How skilled are SBOs at marketing their businesses?
■■ What sorts of technology do SBOs use, and how digitally
adept are they?
■■ How do SBOs feel about the ways big companies try to sell
them goods and services?
% of respondents
Tactics that Are Effective for Marketing According to
US Small-Business Owners, April & Oct 2012
Word-of-mouth and customer referrals
84%
87%
Networking with other small-business owners
55%
49%
Advertising—print, broadcast, radio, etc.
43%
41%
Direct mail or email
46%
37%
Social media
42%
32%
April 2012 Oct 2012
Source: Bank of America, "Small Business Owner Report," Nov 15, 2012
150776 www.eMarketer.com
Mark Dolliver
mdolliver@emarketer.com
Contributors
Christine Bittar, Jennifer Pearson, Tracy Tang
Small Businesses as
Tough B2B Customers:
Shaky in Their Own Marketing, Critical of
Marketing Aimed at Them

2. Small Businesses as Tough B2B Customers Copyright ©2013 eMarketer, Inc. All rights reserved. 2
Both Can-Do and Can’t-Do
Small-business owners are famous for exuding a
can-do spirit. But there are a lot of things they can’t
do. They know their own line of business inside out,
but many are lost when it comes to marketing and
digital usage. Companies that want to sell to small
businesses should not assume they’re dealing with an
audience that is sophisticated in those areas. After all,
those likely aren’t the disciplines that inspired owners
to set up shop in the first place.
“At the end of the day, most of these people are passionate
about their craft,” said Doug Llewellyn, vice president of
business and corporate development at Manta, an online
membership community of small companies. “They’re not
going to spend six hours a day tweaking their website and
making sure it’s SEO-optimized.”
Indeed, small businesses might not have a website at all, even if
they realize that they ought to make more use of new technology.
Small businesses do try—within the constraints that budgets
and time impose. When asked to rate the digital savvy of SBOs,
Llewellyn replied, “I give them an A for effort, and I would
probably give them a B-minus for follow-through.”
Many SBOs realize their shortcomings. In the April 2012 edition
of a semiannual survey by Bank of America, 64% of SBOs
said they “wish they took better advantage of technology
innovations to help manage their business.”
However, it’s difficult for SBOs to better exploit digital when
more pressing tasks demand attention.“They’re the CFO, the
CIO and everything themselves,” said Nauman Haque, research
director for the Enterprise Council on Small Business (ECSB)
at The Corporate Executive Board Co. (CEB), a member-based
advisory firm.“Most small-business owners are not professional
marketers. It’s just one other hat they wear.”
Then again, SBOs might say big companies, with their numerous
MBAs using the latest digital devices, aren’t so hot at marketing
to small businesses. Owners often feel big companies talk down
to them and don’t bother to learn what they actually need.And,
despite the deep personal stake owners feel in their companies,
they don’t feel these marketers make a personal connection with
them. If nothing else, this ought to be a warning to big companies
that the term business-to-business is a dangerous misnomer.
It’s really “business-to-a-person-at-a-business,” especially if that
person is the owner.
How Many They Are, and Who
They Are
Using a capacious definition that includes companies
with as many as 500 employees, the Small Business
Administration pegs the number of US small businesses
at 23 million. Most are far smaller, judging by the US
Census Bureau’s latest tabulation, which found some 21
million “nonemployer firms”—firms with no payroll—as
of 2008.There were 3.6 million businesses with one to
four employees and slightly more than
1 million with five to nine.Another 1.2 million had at least
10 but fewer than 100 employees.
Despite their diminutive size, small companies have a large
cumulative economic impact. According to the US Census
Bureau’s 2007 figures, the most recent available, nonemployer
firms had sales/receipts of $991.8 billion. Businesses with one
to nine employees rang up sales of $2.6 trillion, and those with
10 to 99 employees took in $5.2 trillion.
Not Your Father’s Small-Business Owner
In the corporate world,“diversity”in the upper ranks remains a
largely unrealized goal.In the SBO population,it’s a well-established
reality—one that people who market to small businesses must
take into account.More varied in gender,ethnicity,age and
professional experience,SBOs do not match the archetypal
business-to-business (B2B) audience of old.
Women are conspicuous in the ranks of today’s SBOs.A report
last March by American Express OPEN—the American Express
unit that caters to small businesses—estimated the number of
female-owned US businesses at 8.3 million. Likewise, in Bank of
America’s April 2012 survey of small-business owners, women
made up 42% of its nationally representative sample. In addition,
the female proportion was 60% in the 18-to-34 age group.
% of respondents
Demographic Profile of a US Small-Business Owner,
April 2012
Female 42%
24-54 74%
Employ 2-10 people 64%
Consumer products retail or wholesale, and professional practices 60%
Have owned the business 1-10 years 59%
Source: Bank of America, "Small Business Owner Report," May 17, 2012
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Immigrants also account for an outsized share of small-business
ownership.According to a June 2012 report from the Fiscal
Policy Institute that analyzed American Community Survey
data, 18% of US SBOs in 2010 were immigrants. Mexico, India

3. Small Businesses as Tough B2B Customers Copyright ©2013 eMarketer, Inc. All rights reserved. 3
and South Korea were the leading countries of origin. Likewise,
immigrants launched 30% of small businesses started between
1990 and 2010.Whether foreign- or US-born, Hispanics are a
big part of the business owner population.The US Hispanic
Chamber of Commerce puts the number of Hispanic-owned
companies at nearly 3 million.
The poor economy of recent years has added its own wrinkles
to the age composition of SBOs. In a May 2012 post on the
CEB ECSB Marketing to Small Business Blog, the group noted
a rise in “necessity-driven entrepreneurship.” Millennials, also
known as Generation Y, have become a “source of significant
entrepreneurial activity,” said a November posting, thanks in part
to a dearth of available conventional jobs as this generation has
entered the labor market.“In fact, today’s Gen Y business owners
already comprise one-third of new entrepreneurial activity in the
US,” the post added.They’re not just more digitally savvy than
older owners, said CEB, they’re also “not hampered by legacy
technology.As such, [millennial business owners] are leveraging
new technologies in their businesses from the very beginning”
and seeking suppliers to help them do so.
There’s also much entrepreneurial activity at the other end
of the age spectrum. When an Ad-ology Research survey
in October and November 2012 asked SBOs (in companies
with fewer than 100 employees) to identify organizations
they belonged to, 31.9% cited AARP (formerly the American
Association of Retired Persons). Older SBOs include baby
boomers who have left regular jobs—voluntarily or otherwise.
Realizing their comparative lack of technological acumen,
these older SBOs “prefer to outsource IT functions rather
than making a do-it-yourself attempt, as many other owners
would,” said a September 2012 entry on CEB’s blog.
When SBOs have a corporate background, it affects their
approach to entrepreneurship. “I think the sophistication level
that comes from the corporate side is a little stronger,” said
Dan Gliatta, a partner at Cargo, an ad agency that helps big
companies sell to small ones. “They take the same kind of
discipline and philosophy from the big-business side and apply
it to the small-business side of things.”
Terming these corporate veterans “encore career owners,”
Haque said they have a distinctive approach to purchasing for
their businesses.“They tend to invest in the best thing they can
afford, and the reason is that they understand the long-term cost
of ownership a lot better than other owners,” he said.
The Rudiments of Small
Companies’ Marketing
It’s evident that marketing is important to small-
business owners when they’re asked to say what
keeps them awake at night. A May 2012 survey
conducted by Constant Contact, which helps small
businesses with email marketing and social media,
posed that question. The top response—from 76% of
respondents—was “how to attract new customers.”
Those late-night anxieties are understandable when one notes
the often-limited scope and sophistication of SBOs’ marketing
efforts, especially on the digital side. In the Ad-ology survey
referenced earlier, a slim majority (53.5%) of SBOs said they
spent more than $1,000 on advertising and marketing in the
prior 12 months. That dovetails with an analysis that CEB
published last July on its blog, which found that the average
small company had an annual marketing budget of $1,000.
Though traditional media such as direct mail still claim a
majority of small companies’ marketing dollars, digital spending
is substantial.A Q3 2012 survey of small and medium-sized
businesses (SMBs) by BIA/Kelsey found that they devoted an
average of 29% of their marketing budgets to digital media.
Percent of Marketing Budget that Will Be Spent on
Digital Media According to US SMBs, Q4 2010-Q3 2012
Q4 2010
29.0%
Q4 2011
26.0%
Q3 2012
29.0%
Note: n=187; in the next 12 months
Source: BIA/Kelsey, "Local Commerce Monitor Survey: Wave 16" as cited by
Search Engine Land, Oct 1, 2012
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In December 2012 and January 2013,a BorrellAssociates survey
took a detailed look at the online advertising SMBs planned to
invest in during 2013.Ads on Facebook and run-of-site banner ads
were the leading categories.
How Many They Are, and Who They Are

4. Small Businesses as Tough B2B Customers Copyright ©2013 eMarketer, Inc. All rights reserved. 4
% of respondents
Types of Online Advertising on Which US SMBs Plan
to Spend Money in 2013
Place ads directly with Facebook
28%
Run-of-site banner advertising
25%
Sponsorships
16%
Geo-, behavioral or other targeted display
13%
Streaming video ads
10%
Display ads with audio
9%
Video in online ads
8%
Other online advertising and marketing
5%
No plans to spend on online advertising
42%
Note: n=1,028
Source: Borrell Associates, "2013 Local Advertising Outlook: Get Ready for
the Rebound," Jan 8, 2013
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Since SBOs are often anything but digital experts, their choice
of channels may reflect personal comfort levels rather than a
systematic calculation of return on investment.As a February
2012 report by Street Fight remarked,“Small-business owners
tend to favor the platforms they know how to use as consumers.”
It’s not surprising, then, that many rely on email as a marketing
tool. In the October and November 2012 Ad-ology survey, 26.9%
of respondents said email was the medium on which they spend
the largest share of their ad budget, putting it just behind direct
mail (30.5%) and far ahead of other digital media.
Looking beyond money, overworked SBOs have little choice
but to scrimp on time spent on marketing. In a September
2012 survey that MerchantCircle, a division of Reply.com Inc.,
distributed to its member base of local merchants, fewer
than half the respondents (45.1%) reported spending at least
five hours per week on marketing. “Time is what they lack
the most—more than dollars,” said Mark Schmulen, general
manager of social media at Constant Contact.
Oh, Right, a Website!
These days, one would assume even the smallest company
would have a website. But this is not the case. Ad-ology found
that 68.7% of small businesses had a website—which, of
course, means about three in 10 did not. Some abstainers
achieve an online presence by having a Facebook page, but
it is striking that so many small businesses forgo a website
of their own. And even when they do have a site, many small
businesses neglect to furnish it with fresh content.
% of respondents
Last Time Their Website Was Updated According to US
Small Businesses, Nov 2012
Within the
past 24 hours
11.5%
In the past week
20.9%
In the past month
23.1%
2-5 months ago
17.2%
6-12
months ago
14.5%
More than
a year ago
12.9%
Note: numbers may not add up to 100% due to rounding
Source: Ad-ology Research, "Small Business Marketing Forecast 2013,"
Jan 15, 2013
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Infrequency of updates is consistent with the limited uses to
which many SBOs put their website. Ad-ology found fewer
than half of those surveyed (47.8%) used their site to “inform
customers of new products, special events or promotions,”
and only 28.9% used it to “provide customer support.”
Many small-business websites lack basic information, such
as an address or a phone number. In a February 2013 study
by vSplash, more than six in 10 did not provide a business
address on the homepage.
% of websites studied
Website Homepage Information US Small Business
Websites Are Lacking, June 2012 & Feb 2013
No address on homepage
56.11%
62.22%
No Google Places presence
46.08%
47.46%
No local contact number
43.74%
49.35%
No Bing Local presence
32.64%
35.40%
June 2012 Feb 2013
Note: businesses with under 5 locations
Source: vSplash, "SMB DigitalScape 2013 US Audit Report," Feb 1, 2013
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Under the circumstances, it’s a good thing many SBOs realize
they need help with digital marketing. When Constant Contact
asked small-business owners to identify areas where they
needed assistance, three in 10 cited their website. Even more
mentioned social media and email marketing.
The Rudiments of Small Companies’ Marketing

5. Small Businesses as Tough B2B Customers Copyright ©2013 eMarketer, Inc. All rights reserved. 5
% of respondents
Marketing Activities with Which US Small Businesses
Need Help, B2C vs. B2B, May 2012
B2C B2B Total
Social media marketing 66% 47% 59%
Email marketing 38% 42% 40%
Website 33% 25% 30%
Online advertising (paid search, etc.) 29% 19% 25%
Online surveys and polls 19% 19% 19%
Public relations 19% 17% 18%
Phone calls (for lead generation, etc.) 12% 23% 16%
Events 16% 9% 13%
Direct mail 11% 12% 11%
In-person interactions 8% 11% 9%
Traditional advertising (print, radio, TV) 9% 9% 9%
Other 4% 8% 5%
Note: n=448 (B2C) and 280 (B2B)
Source: Constant Contact, "Constant Contact Small Business Pulse," Aug 3,
2012
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Ready to Spend More?
Eager to win new customers, SBOs would likely prefer to
boost their marketing budgets, but it’s a wish that will go
unfulfilled for many this year. Borrell Associates found just 20%
of respondents planned to spend more on marketing this year,
slightly exceeding the 16% who planned to spend less.
The proportion of owners who planned to spend more on digital
marketing was much higher, though, according to BIA/Kelsey’s
polling. Four in 10 respondents intended to boost such spending;
fewer than one in 20 expected to reduce it.
% of respondents
Change in Digital Marketing Spending According to
US SMBs, Q3 2012
Increase
40.0%
Maintain
48.0%
Decrease
3.7% Not sure
8.3%
Note: n=300; in the next 12 months
Source: BIA/Kelsey, "Local Commerce Monitor Survey: Wave 16" as cited by
Search Engine Land, Oct 1, 2012
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Ad-ology’s survey gives one a sense of where owners will
increase their digital marketing outlays.As the next chart
indicates, websites were the leading target for budget increases.
% of respondents
Change in Online and Mobile Marketing Spending in
2013 Among US Small Businesses
Developing/designing company website
23.4% 44.7% 8.4% 23.6%
Optimizing website for search engines (SEO)
20.5% 42.1% 6.8% 30.5%
Online display/banner advertising
6.8% 24.8% 7.6% 60.8%
More About the same Less Don't use
Note: vs. 2012; numbers may not add up to 100% due to rounding
Source: Ad-ology Research, "Small Business Marketing Forecast 2013,"
Jan 15, 2013
150497 www.eMarketer.com
Encouraging customers to post comments/reviews
19.9% 32.4% 5.2% 42.5%
Email marketing blasts to current clients
18.1% 34.6% 5.5% 41.8%
Email marketing blasts to potential clients
16.5% 32.2% 5.7% 45.6%
Online video (including advertising and/or production)
12.2% 22.7% 6.5% 58.6%
Search engine advertising (like Google AdWords)
12.0% 32.5% 6.6% 48.9%
Ecommerce (online store)
10.3% 21.5% 5.0% 63.2%
Developing a free mobile/smartphone app
7.8% 18.9% 6.0% 67.2%
Mobile advertising or texting
5.5% 18.2% 6.8% 69.6%
150497
What Works for Them
Even as spending rises for digital marketing, many owners of
SMBs are skeptical about digital marketing’s worth. In a July
2012 study conducted by Hiscox, the percentage of SMBs who
cited word-of-mouth as effective was more than double the
number who said the same about social media—79% and 35%,
respectively. Bank of America’s October 2012 survey confirmed
this outlook:“Small-business owners find that traditional
marketing vehicles are more effective than digital marketing,”
with word-of-mouth having the biggest constituency.
The Rudiments of Small Companies’ Marketing

6. Small Businesses as Tough B2B Customers Copyright ©2013 eMarketer, Inc. All rights reserved. 6
% of respondents
Tactics that Are Effective for Marketing According to
US Small-Business Owners, April & Oct 2012
Word-of-mouth and customer referrals
84%
87%
Networking with other small-business owners
55%
49%
Advertising—print, broadcast, radio, etc.
43%
41%
Direct mail or email
46%
37%
Social media
42%
32%
April 2012 Oct 2012
Source: Bank of America, "Small Business Owner Report," Nov 15, 2012
150776 www.eMarketer.com
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In Constant Contact’s survey, email marketing received the
most mentions (83%) when respondents pointed to marketing
tactics they found effective. The website was runner-up (71%).
Significantly fewer mentioned social media marketing (49%),
and only 17% picked online advertising.
Presenting a different mix of choices,Ad-ology found direct mail
got the highest effectiveness score; among digital channels,
online display/banner ads scored best. Most conspicuous,
though, are the large percentages of respondents who said
they had never used many of the ad media that they were
asked about.
% of respondents
Level of Effectiveness of Select Ad Types in Delivering
the Message* According to US Small Businesses,
Nov 2012
Direct mail
13.8% 35.5% 10.6% 40.0%
Very effective
Somewhat effective
Not effective
Have never used
Note: numbers may not add up to 100% due to rounding; *to existing and
potential clients
Source: Ad-ology Research, "Small Business Marketing Forecast 2013,"
Jan 15, 2013
150500 www.eMarketer.com
Mobile advertising/apps/texting
3.2%
11.5% 7.9% 77.4%
Online/mobile video
4.2%
13.5% 7.9% 74.4%
Daily deals (Groupon, LivingSocial, etc.)
2.4%
8.6% 7.6% 81.3%
Online display/banner ads
5.2% 21.0% 11.5% 62.3%
Yellow pages
3.9% 24.3% 19.6% 52.2%
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The Rudiments of Small Companies’ Marketing

7. Small Businesses as Tough B2B Customers Copyright ©2013 eMarketer, Inc. All rights reserved. 7
The Technology They Bring to Bear
Small-business owners’ modest-at-best digital marketing
efforts often reflect a general lack of technological
expertise and infrastructure. In a November 2012 poll
conducted for office products company Staples, 66% of
respondents conceded it was “challenging to keep up
with the constant technology changes.”
SBOs are often patching together available technology rather
than pursuing a coherent strategy. One manifestation of
this is a tendency for companies to rely on employees to
use their own laptops, smartphones and other devices—a
phenomenon sufficiently widespread to have acquired the
acronym BYOD for “bring your own device.”
In January 2013, an article on Intuit Inc.’s small-business blog
said BYOD was “poised to become standard practice in the
near future.” A survey by CDW in Q3 2012 indicated BYOD had
already done so in construction, food services, manufacturing,
professional services and retail. Respondents said 89% of
employees at their companies “use personally owned mobile
devices for work.”
For SBOs, some technologies are must-haves, while others
are more optional. A March 2012 survey by Cargo and Inc.
Magazine identified a hierarchy of tech importance, with
laptop/desktop computers and high-speed internet atop it.
Though 64% of respondents said tablets were “important,” just
27% identified them as “very important.”
% of respondents
Technology that Is Important to Their Business
According to US Small-Business Owners, March 2012
Laptop/desktop 98%
High-speed internet 97%
Wireless/mobile communications/smartphones 91%
Office networks 76%
Videoconference/online meetings 72%
Cloud computing 67%
Tablet devices 64%
Centralized sales platform 53%
Source: Inc. Magazine and Cargo, "B-Side Marketing Project," April 17, 2012
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Tight budgets limit the ability of small companies to
technologically gear up, but many do intend to upgrade where
they can. In a Cbeyond survey among SMBs, 64% intended to
increase their technology outlays this year.
“There’s been a fair amount of limping along with technology,”
said Alice Bredin, founder and president of B2B agency Bredin
and a small-business advisor to American Express OPEN.
But SBOs realize getting technology that makes them more
efficient “is a really great expenditure,” she added.
SBOs take pride in the technological steps they do take—a
point CEB’s blog emphasized in a June 2012 post. “For
example, when asked in interviews about what they view as
significant milestones in their business, owners often mention
accomplishments such as ‘when we moved to all digital
files,’ ‘when we relaunched our website,’ ‘when we made
all our systems mobile’ or ‘when we got VoIP.’” Quite apart
from the practical benefits SBOs derive from those efforts,
“they actually use such investments as markers of success in
their business.”

8. Small Businesses as Tough B2B Customers Copyright ©2013 eMarketer, Inc. All rights reserved. 8
Not Moving Fast to Mobile
Small-business owners see the importance of mobile
marketing as more and more consumers acquire mobile
devices. But that doesn’t mean SBOs have been quick to
make mobile part of their marketing mix.
Owners may have other priorities that take precedence; a
survey of SBOs in April 2012 by j2 Global indicated as much.
When respondents were asked to rank half a dozen online
and offline channels in order of importance to their marketing
strategy, mobile had a lackluster showing.
% of respondents
Most Important Marketing Tactics in 2012 According
to Small Businesses Worldwide
SEO
31% 23% 20% 13% 8% 5%
Social media (e.g., Twitter, Facebook, LinkedIn, etc.)
12% 20% 20% 18% 16% 14%
Mobile
12% 10% 15% 22% 20% 20%
Direct mail
11% 14% 15% 19% 27% 13%
1 (most important) 2 3 4 5 6 (least important)
Note: ranking based on a 6-point scale where 1=most important and
6=least important; numbers may not add up to 100% due to rounding
Source: j2 Global, "Small Business Opinion Survey," June 26, 2012
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Catalog
2%
4% 10% 15% 25% 44%
Email marketing
31% 29% 20% 12% 4%
3%
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So far, mobile marketing is more the exception than the rule
among small businesses. In Ad-ology’s survey, seven in 10 SBOs
said they did not use mobile advertising or texting. More vividly,
BIA/Kelsey’s Q3 2012 polling found that owners who hadn’t heard
of mobile marketing outnumbered those who were using it.
% of respondents
Experience with Mobile Marketing According to US
SMBs, Q3 2012
Currently using
20.0%
Learned about it;
don't use
19.3%Heard of it;
don't know much
31.0%
Haven't heard of it
29.3%
Tried & stopped
0.3%
Note: n=300; numbers do not add up to 100% due to rounding
Source: BIA/Kelsey, "Local Commerce Monitor Survey: Wave 16" as cited by
Search Engine Land, Oct 1, 2012
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Once having tried mobile marketing, do small businesses
stick with it? Not necessarily, according to Borrell Associates’
January 2013 polling. Among owners who had already used
mobile in their advertising and marketing efforts, fewer than
half (45%) said they were “very likely” to do so in 2013; another
38% were “somewhat likely.”
% of respondents
Likelihood of US SMBs to Incorporate Mobile in Their
Ad and Marketing Efforts in 2013
Very likely
45%
9%
Somewhat likely
38%
28%
Not very likely
7%
30%
Not at all likely
6%
23%
Don't know/not sure
6%
12%
Already used (n=245) Not used (n=757)
Note: numbers may not add up to 100% due to rounding
Source: Borrell Associates, "2013 Local Advertising Outlook: Get Ready for
the Rebound," Jan 8, 2013
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Money isn’t always the chief impediment to adoption of mobile
marketing.An April 2012 survey conducted by Web.com Group
asked SBOs to identify their “biggest hurdle in leveraging mobile
marketing.”While 31.4% pointed to “budget,” 35.7% picked
“time and resources.”

9. Small Businesses as Tough B2B Customers Copyright ©2013 eMarketer, Inc. All rights reserved. 9
One way a small company might productively spend some
money is on making its website fully functional via mobile;
however, that has been something of a rarity so far. In CDW’s
Q3 2012 study, 28% of small businesses had a website
optimized for mobile. In August 2012, vSplash estimated that
just 10% of local businesses with a website “have a fully
functioning mobile web presence.”
Trying to Take Advantage of
Social Media
Small companies realize consumers are avid users of
social media and would like to use it to interact with
them. However, many owners have yet to figure out
how to make that environment work for their business.
A majority of small companies use social media to some degree.
According to the Ad-ology report, more than two-thirds of small
businesses used social media as a marketing tool. In Borrell
Associates’ polling of SMBs, 79% reported a social presence in Q4
2012, after a steady rise in penetration in recent years.
% of respondents
US SMBs with a Social Network Site or Page,
Summer 2010-Q4 2012
Summer
2010
45%
Holidays
2010
58%
Q1
2011
64%
Q2
2011
67%
Q4
2012
79%
Source: Borrell Associates, "2013 Local Advertising Outlook: Get Ready for
the Rebound," Jan 8, 2013
150259 www.eMarketer.com
150259
Constant Contact’s Schmulen said the tough economy has
boosted SBOs’ adoption of social media,“but probably for the
wrong reasons.The perception is that social media marketing is
free because sites like Facebook,Twitter and LinkedIn enable you
to create a page for free, but nothing is really free in this world.”
Success on social platforms requires “time and energy—and
often money,” he said. Sustained attention would also help, but
a January 2013 survey conducted by The Wall Street Journal and
Vistage International found just four in 10 SBOs had an employee
who was “dedicated to social media campaigns.”
A July 2012 report by SMB Group distinguished between SMBs
using social “in an informal, ad hoc manner and those taking a
more planned, strategic approach.” It found scant evidence of
a trend toward the latter.“More SMBs are using social media,
but they lack the solutions, expertise and guidance to integrate
them with other business processes and use them more
effectively in their businesses,” said Sanjeev Aggarwal, SMB
Group’s founder and partner.
Not Moving Fast to Mobile

10. Small Businesses as Tough B2B Customers Copyright ©2013 eMarketer, Inc. All rights reserved. 10
That helps explain why many are dubious about the
effectiveness of social marketing. In Hiscox’s July 2012 polling
among SMBs, nearly one in five agreed they “don’t believe
social media is useful for promoting their business.” Another
quarter either didn’t know if social media was useful or didn’t
understand it enough to voice an opinion.
% of respondents
Attitude of US SMBs Toward Using Social Media for
Their Business, July 2012
Actively use social media
35%
Don't believe social media is useful for promoting their business
19%
Would like to learn how to use social media
16%
Don't know if social media is useful for promoting their business
14%
Don't understand social media enough to have an opinion
10%
Would like to use it but don't have the time
7%
Note: numbers may not add up to 100% due to rounding
Source: Hiscox, Dec 4, 2012
149057 www.eMarketer.com
149057
Asked to pass judgment on small companies’ performance in
social media marketing, Schmulen replied, “The short answer
is, most small businesses aren’t doing a great job.” He added,
though, that “they’re getting better.”
Mixed Feelings About Facebook
Along with the rest of the world, small businesses are more likely
to use Facebook than other social networks. But to use Facebook
isn’t necessarily to love it. In an August 2012 poll that Manta
distributed to its online community of small businesses, more
than four in 10 said they had a Facebook presence and found it
“valuable.” But about one-third had such a presence and didn’t
find it valuable or had abandoned it for that reason.
% of respondents
US Small Businesses Who Have a Facebook Presence,
Aug 2012
Have a Facebook
presence and find
it valuable
42%
Have a presence
but don't find
it valuable
30%
Don't have
a presence
23%
No longer do because they saw no value
5%
Note: n=623
Source: Manta as cited in press release, Sep 12, 2012
145415 www.eMarketer.com
145415
Ad-ology’s study found a somewhat more positive outlook
when it asked SBOs whether various social sites helped their
business. Facebook scored best: 62.4% of respondents said
they found it at least somewhat beneficial. Still, just 24.3%
termed it “very beneficial.”
When Facebook introduced Promoted Posts last year, many
owners were distressed as they realized that every update they
put up on Facebook wasn’t reaching everyone who’d ever “liked”
them.The notion of having to pay for wider distribution has been
appalling to some, who had come to view free dissemination of
their posts as something they could rely on forever.
Spending Some Money, and Some Time
Indeed,one measure of SBOs’ seriousness about social marketing
is their willingness to pay for it.It’s telling that while many of
MerchantCircle’s respondents were using free social media for their
businesses,74.3% weren’t using any paid social media.And many
had little intention of doing so in the near future.Querying those
who didn’t already use paid social media,the survey found just one
in five“very likely”to do so in the following three to six months.
% of respondents
Likelihood of US SMBs Using Paid Social Media
Products and Services, Sep 2012
Very likely
20.2%
Indifferent
37.2%
Very unlikely
42.6%
Note: n=2,990 respondents who are not currently using paid social media
products; within the next 3-6 months
Source: MerchantCircle, "Fall 2012 Merchant Survey," Oct 17, 2012
147161 www.eMarketer.com
147161
Trying to Take Advantage of Social Media

11. Small Businesses as Tough B2B Customers Copyright ©2013 eMarketer, Inc. All rights reserved. 11
Still, there’s enough interest on the part of SBOs to put
the sector’s social media spending on a modestly upward
trajectory. In an October 2012 survey conducted by
VerticalResponse, 22% of respondents said they were
increasing their social media marketing budget, compared
with 6% who planned to spend less. Ad-ology got similar
results on the basic question of spending increases or
decreases for social media advertising while gathering more
detail on the kinds of social spending that will rise this year.
% of respondents
Change in Social Media Marketing Spending in 2013
Among US Small Businesses
Promoted postings or sponsored tweets
8.7% 27.5% 7.3% 56.5%
More About the same Less Don't use
Note: vs. 2012; numbers may not add up to 100% due to rounding
Source: Ad-ology Research, "Small Business Marketing Forecast 2013,"
Jan 15, 2013
150499 www.eMarketer.com
Social media advertising (Facebook, LinkedIn, etc.)
20.5% 47.2% 6.4% 25.9%
Facebook widget/app development
7.3% 23.2% 5.4% 64.1%
Reputation management services
6.2% 26.9% 5.6% 61.3%
Social media games/contests
5.7% 22.1% 6.9% 65.4%
150499
Money aside, effective usage of social media tends to be
labor-intensive.Toiling full time on the core activities of their
business, small companies often lack the time and energy this
entails.That was evident in VerticalResponse’s study.Though
spending more time on social media,“many are struggling with
the added workload.”About one-third of those surveyed said
“they’d rather spend less time on social media.”The majority
(57%) spent five hours or less per week on social media.
% of respondents
Weekly Time Spent on Social Media by US Small
Businesses, Oct 2012
1-5 hours
57%
6-10 hours
25%
11-20 hours
11%
21+
hours
7%
Source: VerticalResponse; eMarketer calculations, Nov 1, 2012
147649 www.eMarketer.com
147649
And Elsewhere in the Digital Mix …
Beyond basic elements like a website, mobile and
social, some small-business owners are including other
elements in their digital efforts—with mixed results.
Doubts About Daily Deals
When Groupon propelled“daily deals”into the public
consciousness,the phenomenon drew much attention from
SBOs.However,many small companies had second thoughts
about this by the end of 2012.One gets a sense of the trajectory of
sentiment from the headline of a November article in Bloomberg
Businessweek:“Small Business and Daily Deals:TheAffair is Over.”
When Manta polled SBOs in October 2012, just 3% said daily
deal sites had “brought them repeat business.” In addition, an
end-of-year roundup by the website Small Business Trends
noted a perception by some owners that “most Groupon
users are simply bargain hunters who are only there for the
deals and won’t come back at regular price.”
Even amid such misgivings, owners have not entirely given up
on daily deals. In BIA/Kelsey’s Q3 2012 polling among SMBs,
half the respondents were at least somewhat likely to consider
participating in such deals in the following six months.
% of total
Likelihood of Participation in a Daily Deal According
to US SMBs, Q3 2012
Extremely
likely
11.0%
Very likely
15.0%
Somewhat likely
24.3%
Not very likely
23.7%
Not at all likely
26.0%
Note: n=300; in the next 6 months
Source: BIA/Kelsey, "The Outlook for Online Deals," Sep 17, 2012
145751 www.eMarketer.com
145751
Seeking an Advantage in Search
Search ought to be a boon for small businesses—giving
them widespread visibility while making them conspicuous
to consumers who seek goods in a particular location. But
they’re having a hard time exploiting search’s potential.
As pay-per-click search has become popular with big companies,
small businesses have found themselves struggling to afford the
prime keywords.An October 2012 post on Ad-ology’s blog said
the rising cost of paid search was even driving some SBOs to
redirect marketing money back to old media.
Trying to Take Advantage of Social Media

12. Small Businesses as Tough B2B Customers Copyright ©2013 eMarketer, Inc. All rights reserved. 12
In theory, search engine optimization (SEO) should help small
companies get better mileage from the time and money they
allot to search, but many small companies lack the expertise
this entails. An early 2012 report from World Synergy and
Online Marketing Coach certainly gave that impression with its
title: “Small Businesses Just Don’t Get SEO.”
The February 2013 vSplash study of SMBs lends statistical
support to that view. It found large numbers of these
companies’ websites lacked “even basic elements that are
commonly employed to add robustness to a website for both
the users and search engines.” In some respects, it noted a
worsening of the situation since its June 2012 study of the
matter. For example, “an alarming 15% more websites are not
displaying contact email.”
Small Businesses as Customers
Small businesses are buyers as well as sellers—
purchasing everything from trash bags to computers.
But they’re tough customers, not least because budgets
are tight.And given their travails with leveraging digital
media to promote their own businesses, there’s reason
to suspect they are picky about receiving marketing
messages via digital channels.
Companies hoping to sell to small companies must be aware
of the latter’s financial constraints. In Capital One’s “Small
Business Barometer” survey in September and October
2012, just 14% of SBOs expected to increase their “business
development and investment spending” in the following
six months. Meanwhile, a November 2012 polling for the
Wells Fargo/Gallup Small Business Index found 34% of SBOs
expected to reduce capital spending in the next 12 months.
Much of SBOs’ spending stems from urgent need. “We call it
a fix/break mentality,” said CEB’s Haque. “If something breaks,
I make a purchase to fix it. … Otherwise, it’s just sort of good
enough and I keep using the same,” he added.
Much the same mentality seems to guide SBOs’ relations with
suppliers. Partly because they have little spare time for shopping
around, SBOs tend to stick with suppliers they already have.“In a
given year, only about 7% of small-business owners are going to
be switching suppliers,” said Haque, citing CEB research.Asked if
this reflects strong loyalties by SBOs, Haque replied,“I don’t know
how much of it is loyalty and how much of it is inertia.”
When SBOs do switch vendors, customer service is the
chief reason, according to Cargo and Inc. Magazine’s March
2012 survey. Obviously, nobody likes bad service, but it’s an
especially sore point for SBOs. As the report explained, “SBOs
pride themselves on how they treat customers, so poor
customer service from brands/companies is at odds with their
own business values.”
Off-Target Marketing
Tight budgets notwithstanding, SBOs would likely be more
inclined to open their wallets if the marketing aimed at them
struck a responsive chord—but it often does not. In Cargo
and Inc. Magazine’s polling, about half of the respondents said
companies didn’t market to them effectively. Many had more
specific critiques, including a charge that companies “do not
make the effort to understand their business.”
And Elsewhere in the Digital Mix …

13. Small Businesses as Tough B2B Customers Copyright ©2013 eMarketer, Inc. All rights reserved. 13
% of respondents
Attitudes of US Small-Business Owners Toward
Companies/Brands Trying to Market to Them,
March 2012
Companies do not market to them effectively
52%
Companies are trying to sell to me vs. talk to me
46%
Companies do not make the effort to understand their business
45%
Companies do not understand their needs
43%
Source: Inc. Magazine and Cargo, "B-Side Marketing Project," April 17, 2012
139433 www.eMarketer.com
139433
The report of these findings emphasizes “the degree to which
companies fail to reach small-business owners on a personal
level”—a severe lapse when one considers how personally
SBOs take their business.
In buying things,owners aren’t tapping a line in an institutional
budget.“When they spend money for their business,it’s like pulling
money right out of their own pocketbook,”said Schmulen.Thus,
it’s crucial for marketers to convince a small-business owner that
a product or service isn’t merely good in the abstract but is good
for that person’s specific business.As Gliatta said of SBOs,“They’re
constantly asking the question,‘What’s in it for me?’”Moreover,a
big company can’t take what’s essentially a consumer-oriented
sales pitch and merely plop the phrase“small business”into it,said
Bredin.“That’s probably the biggest mistake we see.”
A November post on CEB’s blog stressed that marketers of
services must persuade owners they need outside help.“The
problem is, business owners are do-it-yourselfers at heart,” it
said. Outside vendors must point out the shortcomings of the
DIY approach—whether in terms of subpar results or simply the
distraction such efforts create from an owner’s core activities.
But, while big companies may assume they’re indispensable to
the small fry, the latter don’t see it that way. In Bank of America’s
October polling, just 17% of SBOs agreed that large companies
“provide services that are critical to my business operations.”
% of respondents
Attitude of US Small-Business Owners Toward Large
Businesses, Oct 2012
Motivate me to be a better small-business owner
31%
Can be good customers for my business
27%
Provide services that are critical to my business operations
17%
Are my biggest competitor
17%
Source: Bank of America, "Small Business Owner Report," Nov 15, 2012
150745 www.eMarketer.com
150745
Manta’s Llewellyn suggested using a case-study approach to
convince SBOs a purchase will pay off for them. “If a vendor
can say, ‘This new piece of XYZ technology helps this person
sell three times the amount of widgets in half the time, and
it only took them a week to get it up and running,’ that’s
incredibly valuable.”
Whatever the content of their message,marketers shouldn’t
over-rely on digital channels to deliver it to an SBO audience.“It’s
tempting to just do digital marketing,”said Bredin,“but we still find
you can have great success with direct mail and other means.”
Their Digital Preferences as Shoppers
Like every other kind of marketing, business-to-small-business
marketing is increasingly digital. But SBOs are apt to be more
receptive to some forms of this than to others. In the Bredin
study, product descriptions on a vendor’s website scored
best among SBOs seeking information on new products and
services (68%). SBOs’ own digital searches for information
were a close runner-up (67.1%), and email newsletters also
had a high favorable score (62.7%).
Small Businesses as Customers

14. Small Businesses as Tough B2B Customers Copyright ©2013 eMarketer, Inc. All rights reserved. 14
% of respondents in each group
Favorable Online Tactics for Learning About New
Products/Services According to US Small-Business
Principals, 2011 & 2012
Vendor's website: product descriptions
Search (e.g., Bing, Google, Yahoo!)
Email newsletters
Vendor's website: resource center
Emails with offers (excluding newsletters)
Facebook
Videos
Google+
Webinars/webcasts
Blogs
Banner ads/ads on sites
LinkedIn
White papers
YouTube
Twitter
Ebooks
Forum or chat room
Audio podcasts
2011
-
68.6%
45.4%
52.6%
31.2%
35.7%
37.1%
-
43.7%
33.1%
27.4%
36.7%
34.8%
-
24.9%
-
24.1%
19.5%
2012
68.0%
67.1%
62.7%
59.9%
58.3%
55.6%
54.6%
50.5%
49.3%
49.0%
47.9%
47.8%
47.1%
47.0%
46.7%
44.2%
41.6%
40.7%
Note: 2011 n=309; 2012 n=308; top-2 box responses
Source: Bredin, "Marketing to SMBs in 2013," Jan 22, 2013
151085 www.eMarketer.com
151085
SBOs will look more kindly on companies that provide them
with useful information than companies that plainly just want
to sell them things. As Llewellyn put it, “That big marketer can’t
be in sell mode all the time. They [sometimes] need to be in
trusted-advisor mode.” The Bredin polling found many SBOs
were receptive to online content that helps them figure out
how to operate their business.
% of respondents in each group
US Small-Business Principals' Opinions About
Business Management Tips on Vendor Sites,
2011 & 2012
More likely to explore a vendor's site if it has business
management tips and advice
41.1%
58.5%
More likely to think favorably of a vendor site if it has business
management tips and advice
41.0%
58.1%
More likely to visit a vendor's site if it has business management
tips and advice
38.9%
58.6%
More likely to buy from a vendor site that has business
management tips and advice
32.2%
54.5%
2011 2012
Note: 2011 n=309; 2012 n=302; top-2 box responses
Source: Bredin, "Marketing to SMBs in 2013," Jan 22, 2013
151090 www.eMarketer.com
151090
Of course, SBOs turn to outside sources of information as
well—partly by digital means. “I think small-business owners
are becoming much more discerning,” said Schmulen.
“They’re asking other people what they think, they’re going
to ratings and reviews and social media sites to find out what
people think about it.”
Small Businesses as Customers

15. Small Businesses as Tough B2B Customers Copyright ©2013 eMarketer, Inc. All rights reserved. 15
Conclusions
SBOs are more diverse than the traditional B2B
audience at big corporations. Recent years have seen
an influx of women, immigrants and millennials, as well as
refugees from the corporate world.
SBOs bring limited resources and expertise to their
marketing efforts. Budgets are low, and SBOs are often their
own chief marketing officer. Busy with the core activities of
their business, they can’t devote a lot of time to marketing.
Nor do many SBOs have the time or money to master the
latest technologies—or even some of the not-so-latest.
Many small companies don’t have a website.When they do have
one,it may be updated infrequently or lack basic information.While
SBOs know their customers are attached to social media and
mobile devices,they often struggle to use those channels effectively.
SBOs take a dim view of the marketing aimed at them.
They feel the companies trying to sell them things make little
effort to understand their needs. But they do appreciate it
when a potential supplier uses its digital resources to provide
small companies with helpful information.
eMarketer Interviews
B2B Perspective: How Should Vendors Approach
Small Businesses?
Alice Bredin
Founder and President
Bredin
Interview conducted on January 24, 2013
B2B Perspective: No One-Size-Fits-All Social Solution
for Small Businesses
Dan Gliatta
Partner
Cargo
Interview conducted on January 9, 2013
B2B Perspective: A Social Network Geared to
Small Business
Doug Llewellyn
Vice President, Business and Corporate Development
Manta
Interview conducted on January 29, 2013
B2B Perspective: On Social Networks, Do a Soft Sell
Mark Schmulen
General Manager of Social Media
Constant Contact
Interview conducted on January 14, 2013
Nauman Haque
Research Director
Enterprise Council on Small Business at The
Corporate Executive Board Co.
Interview conducted on January 10, 2013

16. Small Businesses as Tough B2B Customers Copyright ©2013 eMarketer, Inc. All rights reserved. 16
Related Links
Ad-ology Research
American Express OPEN Forum
BIA/Kelsey
Borrell Associates
Bredin
Cargo
CDW
CEB Enterprise Council on Small Business
Constant Contact
j2 Global
Manta
MerchantCircle
Small Business Trends
SMB Group
SMB DigitalScape
VerticalResponse
vSplash
Web.com Group
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