Benchmark Bytes: What Marketing Services Do SMBs Buy from Website Providers?

After examining SMB website dynamics in our Website Windup series, and in roundtable discussions with thought-leading investors, we decided to go right to the source: SMBs themselves. How do they feel about websites? What features do they want? And do they upsell to adjacent services?

Localogy’s latest Small Business Trends report answers these and other questions across the SMB SaaS product set, which we examine one-by-one in this Benchmark Bytes series. After the last installment examined SMB likeliness to buy additional services from website providers, we now go one level deeper.

Among all of the additional services examined last week, some were marketing related. If we zero in on those purchases, what are the types of services SMBs are choosing from their website provider? It’s an important question as there are clear synergies between websites and marketing.

Before diving in, we’ll reiterate the last installment’s data: 63 percent of SMBs buy hosting services from their website provider, 52 percent buy eCommerce services, 46 percent website security, 46 percent website design and copy services, 43 percent domain services, and 40 percent marketing.

Drilling Down

Now on to today’s data focus, what flavors of marketing services are SMBs buying? SEO and email marketing are tied for the top spot with 40 percent of SMB responses. Social media has 35 percent, followed by banner advertising with 30 percent and reputation management with 25 percent.

Panning back, 40 percent of total  SMBs get marketing services from their website provider. But when segmenting SMBs with less than teen employees, 62 percent do so. This approach contrasts using a best-of-breed specialist in a given marketing category, opting instead for a website-provider bundle.

Website Provider Services (full date set reserved for Localogy members).
What Does it All Mean?

Going a bit deeper, a few things jump out at us:

— The greater propensity for smaller SMBs (or VSBs) to buy website-provider marketing services. is partly driven by their penchant for simplicity in having a single vendor and billing relationship.

— This VSB-affinity signals a potential market-segmentation strategy for website providers.

— Targeting these smaller SMBs could website providers a greater close rate, given the above data.

— However, smaller SMBs could have lower lifetime value in terms of monthly spend and greater probability to churn (a general phenomenon among VSBs).

— SEO’s high ranking is due to the field’s alignment with website presence. After establishing a website, it’s a natural step to enlist services that increase traffic.

— Email marketing’s high ranking is likewise logical, due to its ability to drive traffic, and SMB familiarity with the format.

— Email marketing also has “immediate gratification” in its impact (traffic or otherwise), which tends to resonate with SMBs who want tangible results.

— There’s a clear trend over the past year for website providers to launch email marketing products (or partnerships) and vice-versa (see Constant Contact’s expansion to websites).

— Speaking of simplicity and familiarity, these are the hallmarks of social media advertising.

— Facebook in particular has grown as an SMB ad channel due to its simple ad creation and management, as well as SMBs familiarity with the platform from its societal ubiquity.

— Reputation management meanwhile tends to perform well across the board for SMB affinity, given their vanity and personal desires to cultivate positive reviews and word-of-mouth.

Online Onramp

As these data indicate, websites continue to be the tip of the spear, for SMB marketing. They’re often the first step into digital marketing, followed by other formats. This is generally due to the cost/benefit ratio, given the falling cost of web hosting and escalating standards of website builders.

Websites can also be the base ingredient to get in the game for SEO, social amplification, and other areas (not always the case). This is the reason many website providers are expanding their bundles to deepen SMB relationships with higher-margin products like those listed above.

This of course has gone into hyperdrive in the Covid era as SMBs have been forced to accelerate their digital transformation as a survival imperative. This often sends them into the arms of website builders as an onramp to the many other things they need to accomplish… eCommerce being most prominent.

We’ll return in future installments to go deeper, including other factors like how SMBs have shifted their website spending in Covid-inflicted 2020. Let us know what additional insights jump out at you from the above data, and stay tuned for more data breakdowns in our Benchmark Bytes series.

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