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SMBs Accelerating Adoption of E-Commerce and Online Marketing, According to Yankee Group

Allure of professional web sites and advanced Internet marketing draws SMBs to web-based services.

SB Informer
Wednesday, July 5, 2006; 07:53 AM

Yankee Group announced that the small and medium business (SMB) market opportunity for web-based professional services is burgeoning because most SMBs lack the time, technical expertise and internet marketing skills to establish and maintain a professional-looking web presence on their own. Web-based services enable SMBs and mid-market enterprises to capitalize on online marketing, advertising and e-commerce sales tool benefits, resulting in greater return on investment for their marketing strategies and increased leads and revenue. Yankee Group finds that within the United States:

-- Web-hosting market revenue will rise from $4.4 billion in 2005 to $5.4 billion by 2010.

-- The web-based services market will grow from $2.9 billion in 2005 to $4.1 billion in 2010.

-- Online marketing and advertising spending will grow from $1.3 billion in 2005 to $9.3 billion in 2010.

According to Shifting Web-Hosting and Services Market Dynamics, Part 2: SMBs Accelerate Adoption of E-Commerce and Online Marketing, a Yankee Group Report published today, SMB marketing channels are diverse, which creates an enormous market opportunity for online marketing service providers. As SMBs become increasingly interactive and e-commerce enabled, their adoption of online marketing tools to advertise their businesses will also climb. Currently, about 39% of US SMBs sell and conduct e-commerce on their web sites, which is a 5% increase from 2004. However, as the search marketing area gets more complicated and the online marketing and advertising stakes get higher, SMBs are turning to specialists to outsource their online marketing initiatives.

Although SMBs' adoption of web sites has significantly increased to about 65% in 2005, about 30% of very small businesses (2 to 19 employees) and about 15% of mid-market enterprises (500 to 999 employees) still lack a web site.

"The area of online and search marketing has become too complicated for SMBs to tackle on their own," said Sanjeev Aggarwal, Yankee Group Small & Medium Business Strategies senior analyst. "SMBs and mid-market enterprises will rely on professional web services companies that can help them test, learn, optimize, maintain and enhance their online web presence, e-commerce and online marketing, which generates a greater impact on their business."

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