Earlier this week, I blogged about how more small businesses are turning to social media to cut their marketing costs and increase their connection with consumers. This is just one strategy that small businesses owners plan to take in 2010 as they struggle to emerge from the deep recession. A Forbes study finds that small business owners intend to apply the difficult lessons they’ve learned in the past year. Study participants agree or strongly agree as follows:

• I’m working harder than ever to run my business: 71%
• I’m smarter about running my business as a result of lessons learned in the past year: 80%
• The challenges of the recession have made me a stronger leader: 70%

These business owners also indicate that they will spend more time strategically planning for their future. Just over half of small business owners say they will stick to their core business while 46% will pursue new revenue streams. Regardless of their business strategies, small business owners know they need to renew their focus on marketing. Here are the study results:

• We will invest more on marketing: 62%
• Marketing will focus on branding: 42%
• Marketing will focus on lead development: 48%

Study analysts noted that “[g]iven the stress the recession put on sales pipelines of many small businesses, the lack of overwhelming focus on lead generation could be cause for concern.”

But there’s another way to interpret the data. Many small business owners must wear multiple hats, simultaneously. To recover from the recession, they must streamline costs, improve efficiency and increase sales. Since nearly 1/2 of these businesses say they plan to focus on lead development and nearly 2/3’s are investing more in marketing, the long-term strategy may be just right.

[Source: U.S. Small Business Outlook 2010: Lessons Learned – A Case for Greater Optimism. Forbes Insights (in association with CIT). February 2010]

If consumers are spending more time online and the bottom line of small businesses keeps getting squeezed, many owners are drawing the same conclusion: Marketing via social media makes sense. The findings of the Small Business Success Index™ (SBSI), jointly carried out by Network Solutions® and the Center for Excellence in Service at the University of Maryland’s Smith School of Business indicate that the rate of social media use in the small business arena doubled between 2008 and 2009. Currently, nearly 1 in 4 small businesses uses social media.

Here are specific study findings associated with small businesses that currently use social media:

• Maintain a company page on a social networking site: 75%
• Social media is used to identify and attract new customers: 61%
• Maintain a network through a site like LinkedIn 67%
• Monitor feedback about the business 54%
• Expect social media to be profitable in the next year 45%

Early participants in social media are achieving near celebrity status in some professions. For example, survey participant Dr. Alan Glazier, CEO and Founder, Shady Grove Eye and Vision Care says, “I am now recognized as a thought leader in social networking within my profession and lastly but most importantly, my marketing budget has been reduced by more than 80%.”

As more small businesses turn to social media in the next year, they may encounter some of the negative aspects of this new form of marketing. Here’s what the survey participants outlined as the drawbacks of social media:

• Takes more time than expected 50%
• Allows people to criticize their business 17%
• Negative comments have hurt, not helped their business 6%

Despite the negative aspects of social media, more small businesses are expected to begin using tools like Facebook and LinkedIn because this form of marketing requires a minimal cash outlay during a time of continued financial duress.

[Source: Social Media Adoption by U.S. Small Businesses Doubles since 2009, Robert H. Smith School of Business, University of Maryland, 2.16.10]

A couple of weeks ago, I highlighted the general move by small businesses into search marketing. WebVisible’s survey indicated that the typical small business spent $1,658 on search marketing in Q3 2009. Another detail that came to light in that survey is the increase in the number of keywords used by small businesses.

WebVisible analysts note that the typical small business used 55 keywords in their search campaigns in Q3 2009. This compares to the 43 keywords the typical small business used in Q3 2008. Analysts expect the number of keywords and general complexity in small business search campaigns to grow though they have a way to go to reach the thousands of keywords employed by large advertisers.

The WebVisible survey also revealed significant differences between small business types when it comes to search marketing and the number of key words used. Here’s a list of businesses, their amount as a percentage of total advertisers using search, and the average number of keywords used:

1. Attorneys/Legal Services 7.68% (105 keywords)
2. Dentists 4.97% (74 keywords)
3. Air Conditioning Services 2.63% (55 words)
4. Physicians & Surgeons 2.03% (57 words)
5. Insurance 1.97% (69 keywords)

And what are businesses getting in exchange for this activity? Once a small business spends over $100 in a quarter on a search marketing campaign with good keywords, the click through rate (CTR) is 1% or higher.  CTR leads to conversion action on the marketer’s Web site of 32%. Conversion actions range from submitting an e-mail to bookmarking the page to viewing a video. With results like this, it’s easy to see why so many small businesses expect to increase their spending on search marketing in 2010.

[Source: State of Small Business Online Advertising Q3, WebVisible, Fall 2009]

Last week I highlighted WebVisible’s report on the increased use of search marketing by small businesses. Another research concern, VerticalResponse also reported that search engine marketing will be a key 2010 expenditure for smaller operators. And according to VerticalResponse, small business owners are planning a number of budget cuts to traditional media formats next year.

About half of small businesses,  56.6% of those with fewer than 11 staff members and 48.2% of those with between 11 and 100 staff members, will not use online banner advertising in 2010. The VerticalResponse report also indicates that small business owners are relying less on media formats such as TV and radio. Nearly 80% of survey respondents say they do not plan to use TV next year and 72.7% do not plan to use radio advertising.

As small business operators take actions similar to those employed by larger firms, VerticalResponse CEO and founder Janine Popick believes “marketers need to help small businesses to see the value of integrating search engine marketing such as Google, Yahoo and Bing into their campaigns.”

The shift from traditional to newer forms of marketing will result in some cost savings for small marketers. For example, social media and email campaigns can cost significantly less than TV and radio. However, paid, integrated search engine marketing can be expensive, especially if the campaigns are not carefully targeted. Marketers who efficiently deploy and manage search engine campaigns stand to gain market share and improve profitability in 2010.

[Source: State of Small Business, VerticalResponse, Fall 2009 release]