bia/kelsey's local commerce monitor, wave 16 - core highlights

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LCM Wave 16 Highlights: Core SMBs October 8, 2012

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Data from BIA/Kelsey's Local Commerce Monitor, Wave 16 (Q3 2012) survey of SMBs (small medium businesses) on their marketing and advertising behaviors. The LCM survey tracks SMB ad and marketing spending, Web footprint, media performance assessments, and opinions about key topics like emerging media and sales channels.

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Page 1: BIA/Kelsey's Local Commerce Monitor, Wave 16 - Core Highlights

LCM Wave 16 Highlights: Core SMBs

October 8, 2012

Page 2: BIA/Kelsey's Local Commerce Monitor, Wave 16 - Core Highlights

2BIA/Kelsey Local Commerce Monitor™ (LCM), Wave 16, Q3 2012Proprietary and Confidential. Copyright © 2012 BIA/Kelsey. All Rights Reserved.

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LCM Wave 16 Highlights (Core SMBs)

Executive Summary

Ad Spend & Media Mix

SMBs’ Web Presence

Engagement with Customers

Appendix

Page 3: BIA/Kelsey's Local Commerce Monitor, Wave 16 - Core Highlights

3BIA/Kelsey Local Commerce Monitor™ (LCM), Wave 16, Q3 2012Proprietary and Confidential. Copyright © 2012 BIA/Kelsey. All Rights Reserved.

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Executive Summary

This Advisory presents the key top-line findings of our just-completed LCM Wave 16 survey (for the Core sample*).

Total spend on advertising and promotion is fairly stable, at about $3,000 annually. Spending intentions for the next 12 months are robust.

The migration from traditional to digital/online media continues.

SMBs continue to diversify the media they use for advertising and promotion, now using 5.8 different media on average (a large increase).

Social media, propelled by Facebook, appears to be rapidly evolving into a core medium for SMB advertising and promotion.

Mobile platforms, and the advertising/promotion formats that ride on them, have gained significant traction since Wave 15.

*Since LCM Wave 14, we have surveyed two distinct samples of SMBs: Core and Plus Spenders. The Core sample consists of SMBs that spend an average of about $3,000 annually on media for advertising and promotion. Details on each sample are in the Appendix, slide 31.

Page 4: BIA/Kelsey's Local Commerce Monitor, Wave 16 - Core Highlights

4BIA/Kelsey Local Commerce Monitor™ (LCM), Wave 16, Q3 2012Proprietary and Confidential. Copyright © 2012 BIA/Kelsey. All Rights Reserved.

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Executive Summary

SMBs are increasing their engagement with customers in a variety of ways, including loyalty programs.

SMBs are building a deeper and broader web presence, manifested by an appreciably greater investment in online assets*. In fact, at a recent growth rate of about 29%, spending growth in online presence outpaced the roughly flat spending for total advertising/promotion spending.

This Advisory is being sent to the clients of all our Advisory Programs. Shortly after receiving this Advisory, the clients of each of our six individual Advisory Programs will receive findings from LCM Wave 16 with data and analysis tailored to their specific Advisory program.

*Defined in the survey as: “[Spend for] Updating, maintaining and operating your company's online properties. These include your: Website, business profile pages, landing pages, pages on Facebook or other social networks, pages on Google or similar providers, blog, etc.”

Page 5: BIA/Kelsey's Local Commerce Monitor, Wave 16 - Core Highlights

5BIA/Kelsey Local Commerce Monitor™ (LCM), Wave 16, Q3 2012Proprietary and Confidential. Copyright © 2012 BIA/Kelsey. All Rights Reserved.

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LCM Wave 16 Highlights (Core SMBs)

Executive Summary

Ad Spend & Media Mix

SMBs’ Web Presence

Engagement with Customers

Appendix

Page 6: BIA/Kelsey's Local Commerce Monitor, Wave 16 - Core Highlights

6BIA/Kelsey Local Commerce Monitor™ (LCM), Wave 16, Q3 2012Proprietary and Confidential. Copyright © 2012 BIA/Kelsey. All Rights Reserved.

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Total Spend on Advertising & Promotion (Last 12 Months)

Sample Size = 300

Q103

LCM Wave 14 (4Q2010)

LCM Wave 15 (4Q2011)

LCM Wave 16 (3Q2012)

$-

$1,000

$2,000

$3,000

$4,000

$5,000

$3,176 $3,041 $2,948

*The wave-to-wave differences are within the surveys’ margins of errors. There may be a slight downward drift of a few points annually, but we can’t determine that conclusively from these results.Source: BIA/Kelsey's LCM Wave 16, Q3/2012 (and prior waves, if relevant). Methodology: Online panels. Findings may not be statistically significant. Most questions are asked to the full sample of approximately 300 in each Wave. However, where the sample size less than 300, that question has been asked of a subset of the full sample.

Total annual spending on advertising and promotion (for the prior 12 months) registered again at approximately $3,000. This may suggest a slight downward drift in this type of spending* (the data below demonstrates a 3-year CAGR of -3%).

Page 7: BIA/Kelsey's Local Commerce Monitor, Wave 16 - Core Highlights

7BIA/Kelsey Local Commerce Monitor™ (LCM), Wave 16, Q3 2012Proprietary and Confidential. Copyright © 2012 BIA/Kelsey. All Rights Reserved.

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Spending Intentions for Next 12 Months

Sample Size = 300

Q104

Increase Decrease Maintain Not sure0%

10%

20%

30%

40%

50%

40.0%

3.7%

48.0%

8.3%

Net Increasers: 36.3%

Source: BIA/Kelsey's LCM Wave 16, Q3/2012 (and prior waves, if relevant). Methodology: Online panels. Findings may not be statistically significant. Most questions are asked to the full sample of approximately 300 in each Wave. However, where the sample size less than 300, that question has been asked of a subset of the full sample.

Respondents reported fairly strong spending intentions for advertising and promotion spending – with a net of 36% intending to increase spending.

Page 8: BIA/Kelsey's Local Commerce Monitor, Wave 16 - Core Highlights

8BIA/Kelsey Local Commerce Monitor™ (LCM), Wave 16, Q3 2012Proprietary and Confidential. Copyright © 2012 BIA/Kelsey. All Rights Reserved.

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Percentage of Budget for Digital/Online (Last 12 Months)

Sample Size = 187

LCM Wave 14 (4Q2010)

LCM Wave 15 (4Q2011)

LCM Wave 16 (3Q2012)

0%

10%

20%

30%27.5%

24.3%

27.6%

Q301

*As with some other findings, this observed increase is within the margin of error, but may be directionally correct.This metric is self-reported by the respondent, based on recollection. Source: BIA/Kelsey's LCM Wave 16, Q3/2012 (and prior waves, if relevant). Methodology: Online panels. Findings may not be statistically significant. Most questions are asked to the full sample of approximately 300 in each Wave. However, where the sample size less than 300, that question has been asked of a subset of the full sample.

A modest increase was observed in the percentage of total advertising and promotional spending that went to digital/online media in the last 12 months*.

Page 9: BIA/Kelsey's Local Commerce Monitor, Wave 16 - Core Highlights

9BIA/Kelsey Local Commerce Monitor™ (LCM), Wave 16, Q3 2012Proprietary and Confidential. Copyright © 2012 BIA/Kelsey. All Rights Reserved.

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Percentage of Budget for Digital/Online(Next 12 Months)

Sample Size = 187Q302

LCM Wave 14 (4Q2010)

LCM Wave 15 (4Q2011)

LCM Wave 16 (3Q2012)

0%

10%

20%

30%

40%

29.0%26.0%

29.0%

*As with some other findings, this observed increase is within the margin of error, but may be directionally correct.Source: BIA/Kelsey's LCM Wave 16, Q3/2012 (and prior waves, if relevant). Methodology: Online panels. Findings may not be statistically significant. Most questions are asked to the full sample of approximately 300 in each Wave. However, where the sample size less than 300, that question has been asked of a subset of the full sample.

The pattern observed in the forward-looking estimate in Wave 16 is similar to what has been observed previously – SMBs intend to spend a little more of their total budget for digital/online media than they did in the prior 12 months*.

Page 10: BIA/Kelsey's Local Commerce Monitor, Wave 16 - Core Highlights

10BIA/Kelsey Local Commerce Monitor™ (LCM), Wave 16, Q3 2012Proprietary and Confidential. Copyright © 2012 BIA/Kelsey. All Rights Reserved.

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Media Used for Advertising or Promotion

Sample Size = 300

S11

0%

10%

20%

30%

40%

50%

60%

70%63.0%

53.0%

31.0%27.0%

22.0% 19.0%

Partial List

*Note that this metric is purely “binary”, indicating the percentage of respondents that use a given media, irrespective of spending level. We measure spending with additional metrics.Source: BIA/Kelsey's LCM Wave 16, Q3/2012 (and prior waves, if relevant). Methodology: Online panels. Findings may not be statistically significant. Most questions are asked to the full sample of approximately 300 in each Wave. However, where the sample size less than 300, that question has been asked of a subset of the full sample.

As in prior waves, we see a wide diversity of media usage in Wave 16. We were surprised to see the very high penetration of social media, which 63% of respondents report they now use. In addition, more than one-half (53%) use print or online Yellow Pages directories*.

Page 11: BIA/Kelsey's Local Commerce Monitor, Wave 16 - Core Highlights

11BIA/Kelsey Local Commerce Monitor™ (LCM), Wave 16, Q3 2012Proprietary and Confidential. Copyright © 2012 BIA/Kelsey. All Rights Reserved.

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Media Fragmentation Increased

2007 (Wave 11)

2008 (Wave 12)

2009 (Wave 13)

2010 (Wave 14)

2011 (Wave 15)

2012 (Wave 16)

0.0

2.0

4.0

6.0

3.0 3.1 3.1

4.6 4.4

5.8

Source: BIA/Kelsey's LCM Wave 16, Q3/2012 (and prior waves, if relevant). Methodology: Online panels. Findings may not be statistically significant. Most questions are asked to the full sample of approximately 300 in each Wave. However, where the sample size less than 300, that question has been asked of a subset of the full sample.

A key finding in Wave 16 is that media fragmentation increased significantly – as measured by the average number of different media used for advertising and promotion. The 5.8 different media now used, is almost a 90% increase in the number of media used just 3 years ago.

Note: Each survey wave typically identifies a couple of additional media to choose from, so there may also be a slight “longer menu” effect reflected in this data.

Page 12: BIA/Kelsey's Local Commerce Monitor, Wave 16 - Core Highlights

12BIA/Kelsey Local Commerce Monitor™ (LCM), Wave 16, Q3 2012Proprietary and Confidential. Copyright © 2012 BIA/Kelsey. All Rights Reserved.

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Total Ad Spending Varied Considerably by Age of Business

0-3 Yrs. 4-6 Yrs. 7-10 Yrs. 11+ Yrs.$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$5,000

$2,324

$3,592

$2,941 $2,900 Overall average @ $2,948

*Note: In calculation of each metric above, “outliers” spending more than $40,000 annually were excluded.Source: BIA/Kelsey's LCM Wave 16, Q3/2012 (and prior waves, if relevant). Methodology: Online panels. Findings may not be statistically significant. Most questions are asked to the full sample of approximately 300 in each Wave. However, where the sample size less than 300, that question has been asked of a subset of the full sample.

Q101Sample Size=300

As in prior waves, we also found considerable variation in total spending for advertising and promotion by the age of the business, with a noticeable peak in spending for businesses that have been in business 4-6 years. This is intuitively reasonable, since these businesses have survived the initial shake-out phase, and are still building their customer bases.

Page 13: BIA/Kelsey's Local Commerce Monitor, Wave 16 - Core Highlights

13BIA/Kelsey Local Commerce Monitor™ (LCM), Wave 16, Q3 2012Proprietary and Confidential. Copyright © 2012 BIA/Kelsey. All Rights Reserved.

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Spend on Acquisition vs. Retention

Wave 16 has a new question about the purpose of spending for advertising and promotion. We asked respondents how they would categorize their spending – if most spending went for customer acquisition or for customer retention.

Key findings:

28% said their ad spend was roughly 50/50 against these two purposes.

Almost the same percentage, 29%, said they couldn’t tell or didn’t know.

Of the remaining 43% that were able to identify a dominant purpose for their ad spending, those that said their ad spend was primarily for customer acquisition outnumbered those that said their ad spend was primarily for customer retention by about 7 to 1*.

This metric measured ad spending alone, and did not cover other efforts, such as marketing, customer service, etc. These other efforts may be skewed more heavily towards customer retention.

*The denominator used in this calculation was the number of respondents that said spending was primarily for one purpose or the other, not the total base. Of respondents in that category, some 86% said their ad spend was primarily for customer acquisition.

Page 14: BIA/Kelsey's Local Commerce Monitor, Wave 16 - Core Highlights

14BIA/Kelsey Local Commerce Monitor™ (LCM), Wave 16, Q3 2012Proprietary and Confidential. Copyright © 2012 BIA/Kelsey. All Rights Reserved.

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Spend on Acquisition vs. Retention

Sample Size = 300

Source: BIA/Kelsey's LCM Wave 16, Q3/2012 (and prior waves, if relevant). Methodology: Online panels. Findings may not be statistically significant. Most questions are asked to the full sample of approximately 300 in each Wave. However, where the sample size less than 300, that question has been asked of a subset of the full sample.

Q101AA

>50% for Acquiring

Roughly 50/50

Hard to Say

Not sure

>50% for Retaining

0% 5% 10% 15% 20% 25% 30% 35% 40%

37.3%

28.0%

22.3%

6.7%

5.7%

The new question on the purpose of advertising and promotion spending produced results strongly weighted towards customer acquisition. (See contextual comments on previous page).

Page 15: BIA/Kelsey's Local Commerce Monitor, Wave 16 - Core Highlights

15BIA/Kelsey Local Commerce Monitor™ (LCM), Wave 16, Q3 2012Proprietary and Confidential. Copyright © 2012 BIA/Kelsey. All Rights Reserved.

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LCM Wave 16 Highlights (Core SMBs)

Executive Summary

Ad Spend & Media Mix

SMBs’ Web Presence

Engagement with Customers

Appendix

Page 16: BIA/Kelsey's Local Commerce Monitor, Wave 16 - Core Highlights

16BIA/Kelsey Local Commerce Monitor™ (LCM), Wave 16, Q3 2012Proprietary and Confidential. Copyright © 2012 BIA/Kelsey. All Rights Reserved.

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LCM Wave 14 (4Q2010)

LCM Wave 15 (4Q2011)

LCM Wave 16 (3Q2012)

$0

$500

$1,000

$1,500

$719$876

$1,190

Annual Spend on Website & Online Properties

Q307Sample Size = 178Note: Data above (average annual spending) is based on respondents that provided a number. “Don’t Know” responses were excluded in these calculations.

Source: BIA/Kelsey's LCM Wave 16, Q3/2012 (and prior waves, if relevant). Methodology: Online panels. Findings may not be statistically significant. Most questions are asked to the full sample of approximately 300 in each Wave. However, where the sample size less than 300, that question has been asked of a subset of the full sample.

SMBs continue to increase their annual spending on their website and other web properties. The Wave 16 annual spend of almost $1,200 represents a CAGR (compound average growth rate) of about 29% over the last few years. This is a sharp contrast to the total spend for advertising and promotion, which primarily reflects media spending, which has been at best flat for the last 3 LCM waves (and may even be drifting downwards, per slide 6).

Page 17: BIA/Kelsey's Local Commerce Monitor, Wave 16 - Core Highlights

17BIA/Kelsey Local Commerce Monitor™ (LCM), Wave 16, Q3 2012Proprietary and Confidential. Copyright © 2012 BIA/Kelsey. All Rights Reserved.

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LCM Wave 14 (4Q2010)

LCM Wave 15 (4Q2011)

LCM Wave 16 (3Q2012)

$0

$1,000

$2,000

$3,000

$4,000

$719 $876$1,190

$3,176 $3,041 $2,948

Online Presence

Media Advertising

Media Advertising/PromotionCAGR= -3%

Spend on Advertising/Promotion vs. Online Presence

Q307

Sample Size = 178Source: BIA/Kelsey's LCM Wave 16, Q3/2012 (and prior waves, if relevant). Methodology: Online panels. Findings may not be statistically significant. Most questions are asked to the full sample of approximately 300 in each Wave. However, where the sample size less than 300, that question has been asked of a subset of the full sample.

Comparing the last three Waves for spending on advertising/promotion vs. online presence, it’s conceivable that if trends continue, the two “buckets” of spending may approach parity in a few years. (Of course, three years of data isn’t enough to project a trend with confidence, particularly in a volatile industry.)

Online PresenceCAGR= 29%

Page 18: BIA/Kelsey's Local Commerce Monitor, Wave 16 - Core Highlights

18BIA/Kelsey Local Commerce Monitor™ (LCM), Wave 16, Q3 2012Proprietary and Confidential. Copyright © 2012 BIA/Kelsey. All Rights Reserved.

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Online Properties

We asked respondents if they had various online properties, including the basic two shown on the next slide: website, landing page. (We’re still interpreting the findings, which were were quite a bit different from the Wave 15 readings; the reasons for the differences aren’t readily apparent in some cases.)

We were surprised by the lower readings on websites and landing pages than in Wave 15. In Wave 15, 66% of respondents said they had a website, whereas in Wave 16, this reading dropped to 50% (with another 20% reporting they plan to add a website in the next 12 months).

Possible reasons for this difference include: Misinterpretation of the question (the wording changed in Wave 16). A genuine drop in the percentage of SMBs that have websites (e.g., in

favor of other types of web presence, particularly a Facebook page). A possible abandonment of old websites that would cost too much to

rebuild to current standards. A skew in the sample (although the samples were very similar in

firmographics, and other responses were consistent).

Page 19: BIA/Kelsey's Local Commerce Monitor, Wave 16 - Core Highlights

19BIA/Kelsey Local Commerce Monitor™ (LCM), Wave 16, Q3 2012Proprietary and Confidential. Copyright © 2012 BIA/Kelsey. All Rights Reserved.

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Online Properties

Sample Size = 300 Source: BIA/Kelsey's LCM Wave 16, Q3/2012 (and prior waves, if relevant). Methodology: Online panels. Findings

may not be statistically significant. Most questions are asked to the full sample of approximately 300 in each Wave. However, where the sample size less than 300, that question has been asked of a subset of the full sample.

Q303A

Website Landing Page0%

20%

40%

60%

80%

100%

6.0% 10.0%

23.7%

39.0%

20.0%

20.7%

50.3%

30.3%

Currently have

Don't have, likely to add next 12 months

Don't have, and not likely add next 12 months

Not sure

We also got a lower reading for SMBs with landing pages. In Wave 15, 44% of respondents said they had a landing page, whereas in Wave 16, the reading was just 30%. Another 21% said they are planning to add one in the next 12 months.

Page 20: BIA/Kelsey's Local Commerce Monitor, Wave 16 - Core Highlights

20BIA/Kelsey Local Commerce Monitor™ (LCM), Wave 16, Q3 2012Proprietary and Confidential. Copyright © 2012 BIA/Kelsey. All Rights Reserved.

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Mobile Websites Rapidly Gaining Traction

15%

22%

52%

11%

Currently Have

No, but will Add in Next 12 Mo's.

No, and won't Add in Next 12 Mo's.

Not Sure

**A website optimized for access from a cell phone or other mobile platform.

*Per the note on slide 5, we typically see a fall-off in stated intentions of one-quarter to one-half. So for this metric, that would translate into incremental additions of mobile websites in the 11%-17% range, not the expressed 22%.

Source: BIA/Kelsey's LCM Wave 16, Q3/2012 (and prior waves, if relevant). Methodology: Online panels. Findings may not be statistically significant. Most questions are asked to the full sample of approximately 300 in each Wave. However, where the sample size less than 300, that question has been asked of a subset of the full sample.

Findings on mobile were some of the most dramatically different from Wave 15 to Wave 16. A year ago, in Wave 15, only 8.7% of respondents reported having a mobile website*. In Wave 16, however, there’s a dramatic increase to 14.7% that report having a mobile website, with another 22% saying they intend to add one within the next 12 months**.

Page 21: BIA/Kelsey's Local Commerce Monitor, Wave 16 - Core Highlights

21BIA/Kelsey Local Commerce Monitor™ (LCM), Wave 16, Q3 2012Proprietary and Confidential. Copyright © 2012 BIA/Kelsey. All Rights Reserved.

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LCM Wave 16 Highlights (Core SMBs)

Executive Summary

Ad Spend & Media Mix

SMBs’ Web Presence

Engagement with Customers

Appendix

Page 22: BIA/Kelsey's Local Commerce Monitor, Wave 16 - Core Highlights

22BIA/Kelsey Local Commerce Monitor™ (LCM), Wave 16, Q3 2012Proprietary and Confidential. Copyright © 2012 BIA/Kelsey. All Rights Reserved.

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Percentage of Business From New Customers (Last 12 Months)

Sample Size = 265

Q202

LCM Wave 14 (4Q 2010)

LCM Wave 15 (4Q 2011)

LCM Wave 16 (3Q2012)

0%

20%

40%

60%

39.8%43.7%

39.0%

Source: BIA/Kelsey's LCM Wave 16, Q3/2012 (and prior waves, if relevant). Methodology: Online panels. Findings may not be statistically significant. Most questions are asked to the full sample of approximately 300 in each Wave. However, where the sample size less than 300, that question has been asked of a subset of the full sample.

One of the basic tracking questions is “What percentage of your business came from new customers, in the last 12 months.” This metric stays fairly consistent wave to wave, at roughly 40%. Taken together with the findings on the purpose of ad spending (heavily weighted towards customer acquisition), this underscores the importance of the new customer acquisition process for SMBs.

Page 23: BIA/Kelsey's Local Commerce Monitor, Wave 16 - Core Highlights

23BIA/Kelsey Local Commerce Monitor™ (LCM), Wave 16, Q3 2012Proprietary and Confidential. Copyright © 2012 BIA/Kelsey. All Rights Reserved.

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Customer Engagement: Monitoring Customer Comments Online

57.0%

17.0%

24.0%

2.0%

Yes

No, but will Start

No, and won't Start

Not Sure

*Per the note on slide 5, we typically see a fall-off in stated intentions of one-quarter to one-half. So for this metric, that would translate into incremental additions of the monitoring of customer comments in the 8%-13% range, not the expressed 17%.

Source: BIA/Kelsey's LCM Wave 16, Q3/2012 (and prior waves, if relevant). Methodology: Online panels. Findings may not be statistically significant. Most questions are asked to the full sample of approximately 300 in each Wave. However, where the sample size less than 300, that question has been asked of a subset of the full sample.

As part of our increasing attention to social media, we ask several questions about how respondents deal with customer comments that are posted online (in various locations). A full 57% say they already monitor customer comments online, and an additional 17% plan to start within the next 12 months, for a total of 74%.

Page 24: BIA/Kelsey's Local Commerce Monitor, Wave 16 - Core Highlights

24BIA/Kelsey Local Commerce Monitor™ (LCM), Wave 16, Q3 2012Proprietary and Confidential. Copyright © 2012 BIA/Kelsey. All Rights Reserved.

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Customer Loyalty Programs Very Popular

Sample Size = 300

Q114

Currently Have

No, but will Add in Next 12 Mo's.

No, and won't Add in Next 12 Mo's.

Not Sure

0% 10% 20% 30% 40% 50%

34.0%

21.3%

43.3%

1.3%

55.3%

*Per the note on slide 5, we typically see a fall-off in stated intentions of one-quarter to one-half. So for this metric, that would translate into incremental establishments of loyalty programs in the 10%-16% range, not the expressed 21%.

Source: BIA/Kelsey's LCM Wave 16, Q3/2012 (and prior waves, if relevant). Methodology: Online panels. Findings may not be statistically significant. Most questions are asked to the full sample of approximately 300 in each Wave. However, where the sample size less than 300, that question has been asked of a subset of the full sample.

We added new questions about customer loyalty programs, which we defined as “offering discounts or special promotions to frequent customers.” The most basic question asked if the SMB had such a programs, and if not, if they intended to add one. More than one-half (55%) of respondents reported they either have a loyalty program or intend to offer one in the next 12 months*.

Page 25: BIA/Kelsey's Local Commerce Monitor, Wave 16 - Core Highlights

25BIA/Kelsey Local Commerce Monitor™ (LCM), Wave 16, Q3 2012Proprietary and Confidential. Copyright © 2012 BIA/Kelsey. All Rights Reserved.

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LCM Wave 16 Highlights (Core SMBs)

Executive Summary

Ad Spend & Media Mix

SMBs’ Web Presence

Engagement with Customers

Appendix

Page 26: BIA/Kelsey's Local Commerce Monitor, Wave 16 - Core Highlights

26BIA/Kelsey Local Commerce Monitor™ (LCM), Wave 16, Q3 2012Proprietary and Confidential. Copyright © 2012 BIA/Kelsey. All Rights Reserved.

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Appendix: Addition of Tabs to Indicate Survey Sample

There is now a “tab” along the right-hand edge of each slide. This indicates at a glance which LCM data sample (Core or Plus Spenders) is being used on that slide. We think this is important now that we have a Plus Spenders sample of 300 respondents as of Wave 16, and will be publishing more material on Plus Spenders.

Although many slide decks will draw exclusively from a single sample (either the Core sample or the Plus Spenders sample), the addition of this tab will be a convenience, and will reduce the potential for ambiguity in interpreting the LCM survey results.

Page 27: BIA/Kelsey's Local Commerce Monitor, Wave 16 - Core Highlights

27BIA/Kelsey Local Commerce Monitor™ (LCM), Wave 16, Q3 2012Proprietary and Confidential. Copyright © 2012 BIA/Kelsey. All Rights Reserved.

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Appendix: Notes on Interpreting the Findings About Intentions

In several questions, the LCM survey asks respondents about their intentions regarding use of specific media or platforms in the next 12 months. For example, one of these questions is about their intentions to add a mobile website (if they don’t already have one) – slide 20.

We report the findings in our results, although these are only intentions. Of course, there is a fall-off between expressed intentions and actual follow-through, when we ask the same question a year later. The amount of fall-off is typically between one-quarter to one-half of the expressed intention.

Page 28: BIA/Kelsey's Local Commerce Monitor, Wave 16 - Core Highlights

28BIA/Kelsey Local Commerce Monitor™ (LCM), Wave 16, Q3 2012Proprietary and Confidential. Copyright © 2012 BIA/Kelsey. All Rights Reserved.

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Appendix: Wave 16 Process Notes

This report presents the findings from Wave 16 of our annual LCM survey (Local Commerce Monitor), administered Q3, 2012. The last few waves, we have given the LCM survey to two separate groups of SMBs: A Core sample, for which there is no minimum annual spending

requirement (although the average annual spend typically falls around $3,000).

A Plus Spender sample, for which there is $25,000 minimum annual spending requirement.

In Wave 16 we used 300 respondents for the Plus Spender sample, the same size as our Core sample. (In the previous two waves, the Plus Spender sample was one-half the size of the Core sample). This increase in the size of the Plus Spender sample will support more granular conclusions from the Plus Spender sample, as well as direct comparisons to the Core sample.

Page 29: BIA/Kelsey's Local Commerce Monitor, Wave 16 - Core Highlights

29BIA/Kelsey Local Commerce Monitor™ (LCM), Wave 16, Q3 2012Proprietary and Confidential. Copyright © 2012 BIA/Kelsey. All Rights Reserved.

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Appendix: Wave 16 Process Notes

Wave 16 included many new questions and response options. In particular, there are additional survey questions (and response

options) in the areas of: Online presence Use of social media Use of mobile platforms Use of video Attitudes and intentions about customer loyalty programs Use of specific vendors for selected purposes (e.g. email,

website registration, SEM purchases, etc.) We will publish additional Advisories and Client Information Bulletins

with the findings from our Wave 16 LCM survey, for both the Core and Plus Spender samples, in the next couple of months.

Page 30: BIA/Kelsey's Local Commerce Monitor, Wave 16 - Core Highlights

30BIA/Kelsey Local Commerce Monitor™ (LCM), Wave 16, Q3 2012Proprietary and Confidential. Copyright © 2012 BIA/Kelsey. All Rights Reserved.

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Appendix: LCM Surveys

The LCM survey is a “tracking” survey, monitoring changes over time in a wide variety of metrics relating to usage, spend, attitudes and intentions of SMBs regarding SMB advertising, promotion, marketing and related services.

The key goals are to understand: Media usage Media budget allocation Usage of specific features and capabilities (e.g. video) Performance assessments (ROI) of various media Attitudes towards emerging media Usage of specific vendors for several

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Appendix: LCM Surveys

*Calculations of averages exclude outliers. Outliers are defined as:

Core: Spending over $40k annually. Plus Spenders: Spending over $500k annually. UK: Spending over $500k annually.

UK spending data is converted from British Pounds Sterling to US Dollar equivalents.Plus

LCM Survey Minimum Annual Spend

Average Annual Spend*

Core No Minimum ~$3,000

Plus Spenders $25,000 ~$82,600

UK No Minimum $2,000-$3,000

The full ‘family’ of LCM surveys now consists of the following:

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Appendix: LCM Surveys

The LCM survey (Local Commerce Monitor) is our flagship survey, started in 1999.

LCM sample size is approximately 300 respondents per wave (for both Core and Plus Spender samples, as of Wave 16). The samples are drawn from seasoned panels managed by long-established operators.

The survey takes respondents ~20 minutes to complete (~65 total questions).

Most recent waves: Wave 16, conducted Q3 2012 Wave 15, conducted Q4 2011 Wave 14, conducted Q4 2010 Wave 13, conducted Q3 2009

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Questions and Comments:

Julie Tsoi (pronounced “Choy”) BIA/KelseyDirector, Business Development, Western US, Asia & Australia(650) 969-2425 office(650) 353-6743 [email protected]

Copyright © 2012 BIA/Kelsey. All Rights Reserved.

This published material is for internal client use only. It may not be duplicated or distributed in any manner not permitted by contract. Any unauthorized distribution could result in termination of the client relationship, fines and other civil or criminal penalties under federal law.

BIA/Kelsey disclaims all warranties regarding the accuracy of the information herein and similarly disclaims any liability for direct, indirect or consequential damages that may result from the use or interpretation of this information.