Online Small Business to Increase Web Investment as Business Confidence Returns:

Domainz Study

Domainz eBiz Review finds small businesses online continue to embrace social media but largely reject group buying sites

Key findings:
* The majority of SMBs with an online presence (eSMBs) plan to increase investment in website and internet tools (56% will increase spend) in the next 12 months
* Few eSMBs intend to cut business spend, with the majority likely to keep business investments in line with the past year
* eSMBs using social media for customer-facing operations have increased to 50% in 2011, from 29% a year ago
* Vast majority (79%) of SMBs using social media prefer to direct their customers to their company website instead of their Facebook page
* Only 4% of eSMBs agree that group buying coupon sites offer sales or marketing benefits to their business

Wellington, New Zealand – 19 July 2011 – New Zealand small businesses using online technology intend to keep investing in their IT and online capabilities in the next 12 months as confidence begins to return in the NZ business sector, according to a new research report launched today by Domainz.

The Domainz eBiz Review 2011, which polled 725 New Zealand small and medium sized businesses with an online presence (or ‘eSMBs’), found the top three business areas in which eSMBs planned to increase their investment over the coming year were website and internet (56% said they would invest more), computers and technology (47%) and marketing (46%).

Despite mixed economic indicators and the challenging operating environment experienced by small businesses in the past 12 months, NZ Institute of Economic Research Inc’s (NZIER) most recent Quarterly Survey of Business Opinion[1] showed NZ business confidence was returning and the Domainz eBiz Review showed few eSMBs were planning to cut spend in their business this year, with the majority likely to keep investments in line with the past year. (The single biggest area to which eSMBs intend to cut investment was company vehicles, with 5% of companies indicating they would reduce spend).

Eighty-four per cent of eSMBs agreed or strongly agreed that the internet was vital to the operation of their business and their website and internet presence was the only area of investment where a majority of eSMBs said they would increase their spend in the next 12 months.

“The past 12 months have been a challenging time for small businesses with subdued economic conditions and natural disasters denting business confidence. However, the findings of the Domainz eBiz Review indicate that eSMBs are turning to the internet to help promote and grow their company as business confidence begins to return,” Domainz’s Executive General Manager, Damon Fieldgate, said.

“The innovation and apparent confidence we are seeing from New Zealand’s internet-savvy small business sector is encouraging. It’s our view that the internet is becoming the primary route to market for many businesses and small companies appear to be embracing new technologies and online initiatives to not only survive, but thrive,” he said.

Social media usage showed a substantial increase among eSMBs, with 50% of eSMBs now using social media as part of their customer-facing operations, compared to only 29% last year. However, while 89% of those eSMBs using social media have a Facebook page, only 5% preferred to drive customers to their Facebook page rather than their company website (79% said the company website was the preferred customer destination).

“Social media can be a fabulous business tool for small businesses and those eSMBs who ignore it are missing an opportunity to engage with potential new customers. However as the results show, speculation of the ‘death’ of the company website in favour of Facebook is exaggerated,” Mr Fieldgate said.

“These results suggest eSMBs are instead using social media as a supplement to their business models rather than making them the focal point, which is in turn helping them broaden their scope, customer base and revenue opportunities,” he said.

However, small businesses were not quick to embrace all things new online, with only a small 4% of respondents saying they saw any sales or marketing benefits from group buying coupon sites (for example, GrabOne, Groupy and TreatMe).

“The reaction to group buying from eSMBs indicates caution. While short term promotions have their place, we would encourage small businesses to develop an integrated online marketing approach – including social media – to build long-term relationships with customers for long-term gain,” Mr Fieldgate said.

While respondents who stated they did not use social media decreased this year compared to last year’s survey (50% don’t use social media in 2011 compared to 71% in 2010), the reasons for not adopting social media remained the same. Forty per cent of those eSMBs not using social media still needed to be convinced of the benefits, with 32% saying they did not have the time to maintain it.

The Domainz eBiz Review aims to provide insights on how New Zealand small businesses with an online presence actually use the web to do business and their attitudes to new technologies. For more information and to download the Review, please visit www.domainz.co.nz/ebizreview

ENDS

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