The Web has helped level the playing field for small and medium businesses to market and compete, especially as these companies continue to shift their spend and efforts to digital marketing. While targeted, automated e-mail marketing may have been out-of-reach for SMBs five years ago, it is one of the most-used marketing tactics by companies with fewer than 500 employees today. Mobile might have not made sense for most SMBs a few years ago, but it is now a growing part of the SMB marketing mix. Further, while a social media presence was experimental just two three years ago, it is now a necessary part of small and medium businesses’ marketing strategy, just as it is for enterprise marketers. Also like enterprise marketers, SMBs face challenges managing these different channels in an effective way, as well as keeping up with the lightning-fast face of evolution in digital marketing.

While these challenges persist, technology and service providers are devising solutions specifically targeted at SMBs to help them get a hold of their marketing efforts. With virtually limitless storage, widespread broadband availability, and robust capabilities delivered via a browser, similar tools that big brands use to manage and optimize their marketing efforts are available for SMBs at a fraction of the cost, enabling these companies to more effectively meet their marketing goals. InfoTrends recognized this trend when it first studied small and medium businesses’ marketing approaches in 2009. At the end of 2011, we conducted a follow-up study entitled Capturing the SMB Marketing Automation Opportunity to understand how SMBs’ marketing spend, strategy, and tactics are evolving by surveying over 2,000 small and medium businesses across 13 vertical industries.

One of the most striking developments over the past two years is the growth in the use of social media for marketing. Overall use has increased dramatically: in 2009, over half of respondents did not have any social media presence, but in 2011, just 3% reported not having a social media presence. Facebook was the most popular social network for marketing according to SMBs from our 2009 study, with 32% of use. In 2011, Facebook is table-stakes for SMBs: 90% of respondents reported having a Facebook presence in our most recent study. The use of LinkedIn and Twitter also grew substantially, from 19% and 17% in 2009 to 46% and 43% in 2011, respectively. As use has grown, so has budget allocation for social media initiatives; social media comprised almost 9% of SMBs’ marketing spend in 2011.

While social media is proliferating among small and medium businesses, they continue to face the same challenges they did two years ago: constrained resources related to cost, time, and skills. In fact, these issues were more pronounced in our 2011 study than they were in 2009, especially as it relates to understanding new marketing channels and having the skills to address them. SMBs report having a preference for managing all marketing channels through a centralized technology solution or centralized service provider. Whatever the choice, agility is key; as new channels or networks emerge, solutions or providers need to quickly adapt by providing capabilities and education to help their users be successful.

The SMB user is an important audience for a number of prominent companies today:

• Intuit has a long legacy of delivering products and services to small and medium businesses through its QuickBooks accounting software, website services, and payment services. Last month, it acquired vertically-focused SMB technology provider Demandforce for over $400 million. Demandforce gives Intuit robust technology that helps small and medium businesses manage their social media presence and automate marketing across multiple channels, addressing some of the key challenges SMBs face.
• Recently, Yahoo! launched its Marketing Dashboard toolset for small local businesses with features that help companies monitor and manage their online reputation and analyze traffic from websites and campaigns. Yahoo! has built a fairly successful offering for SMBs with its website hosting and eCommerce offerings, and its Marketing Dashboard makes its existing package a much more attractive offering for SMBs looking for a one-stop-shop.
• With Adobe’s recent release of Creative Suite 6 and the Creative Cloud, the company also launched subscription-based pricing plans starting at $50 per month to access the entire collection of applications instead of paying a large upgrade fee every 6 to 12 months. While it is yet to be proven in the market, this low-cost pricing model could open up Adobe’s tools to a much broader audience, including many SMBs. While almost 40% of SMBs in our 2011 study reported owning Photoshop, only 21% owned Illustrator and 17% owned InDesign. It will be interesting to see if this new plan spurs adoption among SMBs.

The SMB marketing mix is diversifying, exacerbating the challenges that already face  resource-strained businesses. In response, technology and service providers are empowering small and medium businesses with solutions that can help them become more efficient and effective with their marketing and communication efforts. As marketing dollars continue to flow to digital channels from organizations of all sizes, SMBs can harness the same tools their larger counterparts can, allowing them to engage with audiences they would have never been able to reach just a few years ago.

While many companies compete to do business with large companies that can deliver sizeable long-term contracts for print and marketing services, a trend has emerged over the past few years related to targeting small and medium sized businesses across a wide range vertical markets. Many point to providers like Vistaprint on the print marketing side and Constant Contact on the digital marketing side to paving the way for the so-called Long Tail of services for SMBs.

Indeed, by offering self-service tools and a broad array of vertically-focused templates, these companies have grown tremendously and their services are used by millions of businesses worldwide to do everything from buy business cards and manage e-mail newsletters to launching full-blown direct marketing campaigns. While we often talk in terms of business-to-business (B2B) and business-to-consumers (B2C) models, these types of services have blurred these lines by making businesses buy more like consumers, while keeping the systems open enough to even attract consumer users.

Why are these services popularized and still growing? According to the Small Business Administration, there are over 27 million small and medium businesses in the United States, accounting for between 60% and 80% of all U.S. jobs. SMBs are typically characterized as establishments with fewer than 500 full-time employees. Thus, the market opportunity is tremendous, even if you are only able to reach a fraction of SMBs in the country. The power and flexibility of the Web, and in the case of Vistaprint and other online print businesses, the power of a highly-automated production environment, have enabled companies to service large volumes of small orders, something which is becoming more common even in larger organizations.

InfoTrends saw this trend becoming prominent and in 2009, conducted an in-depth study on the topic entitled Capturing the SMB Business Communication Services Opportunity, which surveyed over 2,000 small and medium business across 13 major vertical markets to understand how these companies were utilizing some of the very services just mentioned. We found that just like larger companies, SMBs were diversifying their marketing mix, with traditional media still being an important component but also heavily emphasizing the use of the Web and e-mail to reach their target audiences. Social media was also increasing in importance. At the time, 32.1% of SMBs indicated using Facebook to promote their businesses, while 16.9% indicated using Twitter to do the same. We hypothesize that these numbers have increased substantially in just the last few years.

Furthermore, we found that SMBs had a preference for a “one stop shop” type of experience for printing needs, and we feel that also translates into marketing services, as well. There are a number of vertically-focused services and service providers on the market that cater to a specific set of small and medium businesses. For instance, GuestEngine and Fishbowl provide turnkey marketing services and tools to restaurant owners. Demandforce originally focused on automotive services and dentists, but has expanded its marketing platform to personal services and other healthcare specialists. SharperAgent provides self-service, cross-media marketing campaigns to independent real estate agents, and was recently acquired by real estate software developer Market Leader.

These types of vertical-focused platforms are the next step in the evolution of SMB marketing services. InfoTrends is referring to them as SMB marketing automation services, as many of them aim to automate various aspects of the marketing process for companies while tailoring the services to meet the intricate needs of a particular market. Focusing on one or a particular set of vertical markets also equals more replicable applications. We are currently conducting a follow-up study to our 2009 research on this topic with a study entitled Capturing the SMB Marketing Automation Opportunity, which will be sure to glean valuable insight into how this market continues to evolve.

As it is often said, small and medium businesses are the backbone of the U.S. economy, and they want to succeed and be effective in their marketing just as much as a large enterprise corporation does. Through the power of the Web, many SMBs now have the tools to market smarter. Nevertheless, there is always room for improvement and plenty of opportunity exists for service providers that want to take on the task of making print and marketing services more effective for a particular market.