Small Business Search Spending Surged in Q4 - Up 111 Percent Over Same Period Previous Year, According to New Report from WebVisible

March 23, 2010; 02:34 AM

IRVINE, Calif. (March 23, 2010) – In one more sign that economic recovery may be taking hold – at least in the small business sector – small businesses are spending more on search and achieving greater success in converting their leads into website actions, according to the latest quarterly report from WebVisible (www.webvisible.com), released today.

The release of the report coincides with the BIA/Kelsey Marketplaces Conference, held in San Diego today through Wednesday. 

The average small business advertiser spent $2,149 on search advertising in Q4 2009 – an increase of 30 percent over Q3 2009 and 111 percent over Q4 2008. 

In addition, conversion rates improved for small business advertisers, with 35.3 percent of clicks resulting in website conversion action – compared with 32 percent in Q3 2009 and 26.6 percent in Q4 2008.  Actions are predominantly calls, and also include sending emails or SMS texts, form fills, printed driving directions or video views.

Video capability was the fastest-growing website feature for small business advertisers over the past year, with 19 percent of advertisers showing video on their websites in Q4 2009, versus just 5 percent in Q4 2008. 

These are among the top findings of the second installment of The WebVisible Report: State of Small Business Online Advertising Q4 2009, which examines trends among WebVisible’s U.S. advertisers from Q4 2008 through Q4 2009.  The data represents nearly $22 million in U.S. small business advertiser spending in Q4 2009 from more than 12,000 individual advertisers.  The report also analyzed Q4 2009 data from more than 10,000 advertisers in the United Kingdom.

“These numbers show increased confidence by small businesses in using search to gain leads – and increased ability to turn those leads into sales,” said WebVisible CEO Kirsten Mangers.  “We get better every day at managing the businesses’ content to increase conversion and enhance their advertising presence so they’ll benefit from lower costs overall. 

“Another key is knowing the most cost-effective place to spend those ad dollars,” said Mangers.  “For example, Bing has higher click-through rates and lower costs-per-click than Google, so it’s often a better buy.  We’re also continuing to monitor how the merging of Bing and Yahoo! will affect small business advertisers.  It’s entirely possible Yahoo!’s click-through rates could rise as a result.”

 The average keyword count per small business advertiser increased by 21 percent in Q4 2009 over Q3 2009, to an average 67 keywords.     

Click-through rates (CTR) and cost-per-click (CPC) did not change significantly on the search engines on a quarter over quarter (QoQ) basis.  Bing* maintained the highest CTR while Google maintained the highest CPC.  The share of spending was unchanged on Yahoo! and Bing in Q4 2009.  Some spend was shifted from Google to Ask as advertiser resellers sought lower-cost sources of traffic. 

Analyzing Ad Trends Among Five Distinct Groups of SMBs

Effective with the Q4 2009 study, WebVisible has begun analyzing the spend among different types and sizes of small businesses.  The company segmented advertisers into five distinct groups based upon their organizational maturity and advertising propensities: Part-Timers, Soloists, Entrepreneurs, Small Business Generalists and Small Business Managers.  

In general, the newer a business is, the less it spends on advertising.  Advertisers with well-established businesses, five or more employees, and in business for five or more years tend to spend more on advertising. 

“In most reports and trend stories, all small businesses get lumped into the same category,” said Mangers.  “But a solo entrepreneur running his architecture business in the evenings is not going to have a lot in common with a 10-person hair salon or a three-location local restaurant chain.  We’ll continue to monitor the trends and mine our wealth of data for deeper insights into these segments of small business advertisers.  And we are cheered, overall, by what this indicator may suggest about the overall health of the SMB sector.”   

Anyone can request a full copy of The WebVisible Report by going here: http://www.webvisible.com/wvreport.  Members of the media contact info@edgecommunicationsinc.com or call (818) 990-5001 for report highlights.

Note:  *MSN (Microsoft Network) search was renamed Bing in Q2 2009. Data from previous quarters reflect data from MSN Search.

About WebVisible, Inc.

WebVisible makes it easy for small and mid-size businesses (SMBs) to be found online, where and how customers are looking. The leading provider of local online marketing products and services since 2001, WebVisible was among the first to pioneer the use of search as a reliable, measurable avenue to connect directly with a buyer’s needs. The company has helped more than 100,000 SMB customers from more than 3,000 industries in 14 countries to create innovative and accountable Internet advertising campaigns.  SMBs partner with WebVisible directly and through its many partner companies, including Intuit, AT&T, British Telecom and The New York Times Company.  WebVisible is based in Irvine, Calif.  For more information, visit www.webvisible.com or call (949) 502-5757.

Media Contact

Ken Greenberg

Edge Communications, Inc.

818/990-5001

ken@edgecommunicationsinc.com

WebVisible Report: State of Small Business Online Advertising Q4 2009

Executive Summary

·     Average small business search spending surged in Q4 with the average small business advertiser spending $2,149 on search advertising in Q4 2009.

This represented an increase of 30% over Q3 2009 and 111% over Q4 2008.

·     The share of spending was unchanged on Yahoo! and Bing in Q4 2009. Some spend was shifted from Google to Ask as advertiser resellers sought lower cost sources of traffic.

·     Click-through rates (CTR) and cost-per-click (CPC) did not change significantly on the search engines on a quarter over quarter (QoQ) basis. Bing* maintained the highest CTR while Google maintained the highest CPC.

·     Conversion rates improved significantly for small business advertisers in Q4 2009 with 35.3% of clicks resulting in website conversion action, versus 32% in Q3 2009 and 26.6% in Q4 2008.

·     Video capability was the fastest growing website feature for small business advertisers over the past year with 19% of advertisers showing video in Q42009, versus 5% in Q4 2008.

·     WebVisible segmented advertisers into five distinct groups based upon their organizational maturity and advertising propensities: Part-Timers, Soloists, Entrepreneurs, Small Business Generalists, and Small Business Managers. Results of the study indicate that, in general, the newer a business is, the less it spends on advertising.  Advertisers with well-established businesses, five or more employees, and in business for five or more years tend to spend more on advertising.

·     UK small business advertisers spent significantly less than US advertisers in Q4 2009 at an average of $183 per advertiser. UK keyword portfolios were also much smaller at an average of 26 root keywords per advertiser.

·     UK click-through rates (CTR) were significantly lower than in the US in Q4 2009 but varied similarly – Bing had the highest CTR and Yahoo! the lowest.

·     UK cost-per-click rates (CPCs) were about 1/5 of CPCs in the US in Q4 2009. Google had the highest CPCs in the UK just as in the US.

·     The professional services of law and dentistry made up the largest percentage of advertisers at 9.4% and 6.1% of total advertisers respectively.

• The distribution of categories in the UK is wider than in the US – no single category accounted for more than 2% of advertisers in Q4 2009. Florists, builders, and beauty salons were among the most popular small business advertiser categories in the UK.

*MSN (Microsoft Network) search was renamed Bing in Q2 2009. Data from previous quarters reflect data from MSN Search.

Detailed Findings

• WebVisible has served over 100,000 global clients across more than 3,000 vertical categories.
• In Q4 2009, the average small business advertiser spent $2,149 on search advertising with WebVisible (30% increase from Q3 2009 and 111% increase over Q4 2008)
• The average keyword count per advertiser, which represents root keywords (versus individual bid units with geographic modifiers), increased by 21% in Q4 2009 over Q3 2009 to an average 67 keywords.

Search Engine Trends

• Beginning in mid-2009, some of WebVisible’s reseller partners began to move a portion of their advertisers’ search engine spending to Ask, which resulted in a share of spending increase of 4.5 percentage points for Ask from Q3 2009 to Q4 2009.
• Google automatically syndicates its ads to Ask, but advertisers can take advantage of Ask’s lower cost-per-click by directly advertising on the engine. As a result of this manual change, share of spending on Google dropped by 4.5 percentage points in Q4 2009 over Q3 2009.
• Yahoo! Search accounted for 26.4% of total spending, and Bing accounted for 10.5%. Bing’s share was up 0.8 percentage point on a year over year (YoY) basis, while Yahoo’s share was down 6.6 percentage points.
• Google showed a YoY improvement in CTR of 32%, Yahoo! was up 123%, and Bing was up 109%.
• On a QoQ basis, Google showed minimally improved CTR – up 2.5%, while CTR dropped by 23% on Yahoo and 3.3% on Bing.
• Google continued to lead in CPC pricing in Q4 with its average CPC flat QoQ but up 12% YoY.
• CPCs on Bing and Yahoo! were up just slightly QoQ – 2.2% and 2.5% respectively.
• Ask showed the lowest overall CPCs at 1/7 the cost of Google

Conversions

• In Q4 2009, 3.9% of clicks resulted in a call for those advertisers who had a call tracking number. This was down 0.6 percentage point from Q3 2009 but was similar to the 0.5 percentage point drop in call rate that occurred from Q3 2008 to Q4 2008.
•  The YoY increase in call conversions was 0.8 percentage point.
• The percentage of clicks that converted to a website action, which could include sending an email or SMS, filling out a form, printing driving directions, or viewing a video, improved by 3.3 percentage points in Q4 2009 – from 32% in Q3 2009 to 35.3% in Q4.
• On a YoY basis, the percentage of users performing a converting action improved by an impressive 8.7 percentage points.
• In Q4 2008, just 5% of advertisers had video capability on their sites, while in Q4 2009 that number had nearly quadrupled to 19%.

Small Business Advertiser Segmentation

• Part-Timers, perhaps with bigger dreams and better funded pockets than Soloists, who depend on their business for income, outspend Soloists by 33%.
• Entrepreneurs, who still keep a tight rein on expenses, spend slightly less than average.
• Small Business Managers, who are most likely sales or marketing specialists within their organizations, are dependent on advertising to drive leads to the business and thus spend more than twice the average among all the small businesses included in the study.

UK/US Metric Comparison

• Webvisible currently places ads for more than 10,000 small businesses in the UK

• On average, UK small business advertisers spent less than 1/10 of what US small business advertisers spent in Q4 2009 at $183 per UK advertiser, versus $2,149 per US advertiser.
• UK small business advertisers also bid on fewer keywords at an average of 26 per UK advertiser, versus 67 per US advertisers
• Bing has the highest CTR in the UK due to its pure traffic served only on Microsoft sites, while Yahoo! has the lowest CTR because of its wide network of syndication partners.
• There is less variation in CTR among the search engines in the UK than in the US – Bing’s UK CTR was 175% greater than Yahoo!’s, while Bing’s US CTR was 276% greater than Yahoo!’s in the US.
• It cost significantly less for UK small businesses to advertise on search than their counterparts in the US – UK CPCs were about 1/5 of CPCs in the US in Q4 2009 even with currency conversion taken into account
• As in the US, Google commanded the highest CPCs among the engines while CPCs on Yahoo! and Bing were almost equal.

Small Business Advertiser Categories

US Categories

• There are more than 3,000 categories of businesses tracked by WebVisible in the US and more than 1,000 in the UK.
• In the US, the professional services of law (9.4% of advertisers) and dentistry (6.1% of advertisers) are the most likely to be participating in search advertising. Other professional services that are likely to engage in search advertising on a local level are physicians, which includes high-fee plastic surgeons, as well as insurance brokers.
• The trade services most likely to engage in search in the US are general contractors, auto repair shops and dealers, and home services, which include services relating to garage door openers, major appliances, windows, flooring, and fire and water damage restoration.

UK Categories

• The distribution of categories in the UK is wider than in the US – no single category accounted for more than 2% of advertisers in Q4 2009.