This Little SMB Went to Market

Small and midsize businesses, driven by the allure of e-commerce and online marketing, are increasingly turning to Web-based professional services and solutions for help, according to a new study by Yankee Group. Overall, market revenue is expected to increase from $4.4 billion in 2005 to $5.4 billion by 2010. This is due to most SMBs lacking the time, technical expertise, and Internet marketing skills to establish and maintain a professional-looking Web site, according to the report. "Web Hosting and Web-based Services Market Dynamics and Forecast--Part 2" states that SMBs have become increasingly Web savvy in recent years. Smaller companies are now looking to a host of online channels, such as search engines (organic or paid placements), banner advertising, promotions on shopping engines like Yahoo!, email marketing, and online catalogs, with the rapid adoption of broadband Internet connectivity by U.S. consumers providing the impetus, according to Sanjeev Aggarwal, SMB business strategies senior analyst at Yankee Group. Currently, 39 percent of U.S. SMBs sell and conduct e-commerce on their Web sites, which is a 5 percent increase since 2004, according to the report. But SMBs are outsourcing their online marketing initiatives to specialists as Web business gets more complicated. Of all the services, search engine marketing and Web analytics are expected to lead the way, with more than 50 percent of SMB Web sites capturing customer contact information for marketing activities last year. According to Aggarwal, Google and Yahoo! are obvious leaders in the search engine space. In addition, Microsoft's MSN adCenter offers SMBs an intuitive and cheap solution for keyword marketing. In Web analytics, vendors such as WebSideStory and sites like Google (with its Google Analytics product), WebTrends, and Coremetrics are providing solutions and services tailored for both midmarket companies and SMBs. Still others are looking for outside help simply in starting a Web site, or developing a Web catalog or interactive e-commerce function for an already existing one. Although SMBs' adoption of Web sites has increased significantly in recent years, about 30 percent of very small businesses (2 to 19 employees) and about 15 percent of midmarket enterprises (500 to 999 employees) still lack a Web site, according to the report. Companies like Infinity Internet, Web.com (now owned by Interland), and GoDaddy are offering service that enable startups to get their foot into the Web door. "The area of online and search marketing has become too complicated for SMBs to tackle on their own," Aggarwal says. "SMBs are relying on professional Web services companies to help them test, learn, optimize, and enhance their online Web presence." Related articles: SMBs Take Advantage of the Web SMBs Are Serious About Web Hosting

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