SOURCE: MerchantCircle, a Reply! Inc. property

MerchantCircle, a Reply! Inc. property

December 08, 2011 09:00 ET

Nearly Half of U.S. Small Businesses Believe Economy Has Worsened Over Past Six Months

Latest MerchantCircle Survey of Local Merchants Shows Decreasing Business Optimism as Hopes of a Near-Term Economic Recovery Have Faded

MOUNTAIN VIEW, CA--(Marketwire - Dec 8, 2011) - MerchantCircle, the largest social network of local business owners in the nation, today issued the results of its seventh Merchant Confidence Index, a survey of local business owners across the country sharing their confidence levels in the current economy, and their expectations of future revenue, marketing spend and hiring. The results of the 2011 Q4 survey of more than 2,500 local merchants indicate that business optimism has decreased over the past six months. The current MCI score is 59.4 out of 100, down 6 percent from the score of 63.2 in June 2011.

"Merchants are adjusting their expectations as their overall confidence in the economy recovery has waned," said Darren Waddell, EVP of product and marketing at Reply!, Inc., the parent company of MerchantCircle.com. "We are seeing merchants continue to tighten their belts and either maintain or reduce their marketing budgets, and also slow down hiring, as hopes of near-term economic improvement have declined."

Key survey findings include:

Merchants report waning confidence in economy, revenue growth

  • When asked to rate the economy compared with 12 months ago, 48 percent believed it had declined, as compared to 36 percent in June 2011.

  • 55 percent of small business owners expect revenues to stay the same or decline over the next three months, as compared to 43 percent in June 2011.

  • 46 percent of merchants expect holiday revenues to remain the same as last year, and 31 percent of merchants expect holiday revenues to improve. This is down slightly from last year, when 34 percent anticipated increased holiday sales.

More merchants plan to decrease marketing expenditures, put hiring on hold

  • While 57 percent of merchants expect their marketing expenditures to remain flat over the next three months -- the same as in April 2011 -- only 22 percent expect their marketing expenditures to increase, down from 28 percent in April 2011. In fact, nearly as many businesses (21 percent) report plans to decrease expenditures over the next three months as those who plan to increase their spending.

  • Over the next three months, 72 percent of merchants expect to keep headcount the same, up from 70 percent in April 2011. However, just 16 percent plan to add jobs to their businesses over the next three months, down from 21 percent in June 2011.

About the Merchant Confidence Index

The Merchant Confidence Index is a quarterly survey conducted by MerchantCircle, the largest social network of local business owners in the U.S. with over 1.6 million members. The Index is designed to track trends in small business sentiment over time and is derived from four key questions designed to synopsize the prevailing trends among local business owners. The overall index score is based upon a normalized five-point Likert scale.

This seventh Merchant Confidence Index survey was fielded online, between November 8, 2011 and November 28, 2011, and sent to a random sample of MerchantCircle's member base of over 1.6 million local business owners. There were 2,540 total responses from local business owners across the United States. Responding businesses classified themselves as legal and financial services, automotive, health and beauty, entertainment, travel and more, with 78 percent of respondents employing fewer than five people. The survey data can be broken out by state, business type or business size (by headcount) upon request. No incentive was offered to complete the survey.

For more information, please visit blog.merchantcircle.com.

About Reply!, Inc.

Reply! Inc., the parent company of MerchantCircle.com, operates the leading auction marketplace that enables advertisers to acquire locally-targeted and category-specific customer prospects on a cost-per-Enhanced Click™ or cost-per-lead basis. By eliminating the need for advertisers to develop and maintain complex, expensive online marketing infrastructures and teams of experts to source online consumer traffic from many different channels, Reply.com simplifies online locally-targeted marketing for businesses of all sizes. To learn more about Reply!, visit www.reply.com. Additional information is available at blog.reply.com.

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