SOURCE: Reply!, Inc.

Reply!, Inc.

October 17, 2012 09:00 ET

Small Business Owners Split on Perceptions of Economic Recovery

With Economic Concerns Still Paramount, Reply! Survey Reveals Largest Growth Opportunities in Advertising Services Are in Mobile; Small Businesses Favor Mitt Romney Over Barack Obama by 2 to 1 Margin

SAN RAMON, CA--(Marketwire - Oct 17, 2012) - Reply!, the leading marketplace for locally-targeted advertisers, today issued the results of its eighth Merchant Confidence Index, a survey of local business owners across the country sharing their confidence levels about the current economy, their expectations of future revenue and their assessment of marketing services. The data shows that economic concerns are still weighing heavily on small businesses, with nearly 60 percent of respondents stating that they believe the U.S. economy was better off four years ago than it is today. With these concerns front of mind, SMB investment in many paid marketing services has stagnated, with very little growth seen in adoption of daily deals and several other paid services. However, mobile marketing is the one channel that is heating up in the small business community.

"Our data shows that American small businesses are still struggling to recover from the recession," said Payam Zamani, CEO of Reply.com, Inc. "As a result, small business owners have turned to free social media platforms such as Facebook and Twitter as marketing vehicles. In turn, they have slowed their investment in paid marketing services such as daily deals, though there are still many opportunities for growth within certain segments of service offerings." 

Key findings include:

1. Small business owners are split on perceptions of economic recovery.

Economic concerns continue to be widespread among small business owners. Nearly 60 percent of respondents believe that the US economy was better off four years ago than it is today; only 22 percent of small business owners believe the economy is better off now, and 21 percent believe there have been no changes. Similarly, small business owners are split on their perceptions of future economic recovery. More than one-third of respondents (37 percent) believe that the economy will be better off a year from now; while 36 percent believe it will be worse and 28 percent believe the economy will remain the same.

However, there is a bright spot. Small business owners plan to do their part to stimulate the economy. More than 23 percent of small business owners plan to increase their headcount in the next six months, up from 21 percent in Q4 of 2011. Meanwhile, 50 percent plan to maintain their current headcount, while only eight percent plan to reduce their number of employees in the next six months, down from 13 percent last year.

2. SMBs slow to adopt paid marketing services, including daily deals and online reviews.

When asked what free social media platforms they use to promote their business, nearly 70 percent of respondents state they use Facebook and 33 percent are using Twitter. However, when asked which platforms they are paying for promotions, only seven percent are tapping into paid promotions on Facebook and only one percent on Twitter.

Likewise, there has been slow growth of other paid marketing services such as daily deals and review sites. Only 11 percent of respondents have run a daily deal over the last six months -- the same percentage as in Q4 2011 -- and only 11 percent say that it is likely they will run a daily deal in the next 3-6 months.

With regards to online reviews, while 46 percent of respondents see online reviews as helpful to their business, only 10 percent are using paid services and 90 percent have no plans to start using paid review services.

3. Mobile marketing is heating up in the small business community.

Small business owners are turning to mobile to support their business needs. Mobile marketing is on the rise with 8 percent of respondents currently purchasing mobile ads and 15 percent planning to in the next 3-6 months. Likewise, when asked how likely they are to explore building a mobile website or mobile app for their business in the next 3-6 months, 16 percent of small business owners stated that they are very likely to explore this marketing channel. Meanwhile, 17 percent state that they already have an active mobile app or website.

The survey also reveals that SMBs are more likely to use mobile services that facilitate transactions such as Square and PayPal, with 14 percent and 20 percent noting their usage, respectively. An additional 11 percent are planning to start using a mobile transaction service in the next 3-6 months.

4. SMBs unphased by recent high-profile IPOs.

While many SMBs remain pessimistic about economic recovery, these concerns have not translated into negative perceptions about recent high-profile IPOs in the social and marketing sectors. When asked about their perceptions of Facebook as a company after it went public in May, nearly 70 percent of small business owners said their opinion about the company did not change.

Likewise, when asked about their perceptions of Groupon as a company after it went public, the majority (72 percent) of small business owners stated no change to their perception.

5. Republicans have been more effective at positioning the party as supportive of small business interests.

Mitt Romney is favored 2-1 over Barack Obama as an advocate for growing small businesses in the United States. Similarly, 52 percent said Romney was better equipped to lead the US in an economic recovery, compared to 28 percent who said Obama was better equipped; meanwhile, nearly 20 percent of small business owners stated that neither candidate is equipped for the job.

There is also limited favorability for the Patient Protection and Affordable Care Act (PPACA) within the SMB community. 63 percent of respondents stated that the Act would negatively impact small businesses, while only one quarter (23 percent) said that the Act would positively impact small businesses. Only 6 percent stated that they believe there will be no impact, and 9 percent are unsure. 

About the Merchant Confidence Index
The Merchant Confidence Index is an annual survey conducted by MerchantCircle.com, a division of Reply.com, Inc. 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.

This eighth Merchant Confidence Index survey was fielded online, between September 17, 2012 and September 30, 2012, and sent to a random sample of MerchantCircle's member base of about 1.4 million local business owners. There were 3,434 total responses from local business owners across the United States. Responding businesses classified themselves as legal and home services, automotive, health and beauty, entertainment, travel and more. 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. 

Reply.com, Inc. is not affiliated with any political party. The results of this survey in no way represent the views of the company.

About Reply.com, Inc.
Reply.com, Inc. operates the leading marketplace for locally-targeted advertisers. Reply!'s platform provides advertisers of all sizes with a simple and scalable solution for locally-targeted marketing. Reply! owns and operates many destination sites including iMotors.com, Contractors.com and MerchantCircle.com, which is the largest online network of local business owners in the nation with over 1.4 million member merchants and 17 million monthly local consumer visits. To learn more about Reply!, please visit www.reply.com.

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