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November 24, 2004

According to The Kelsey Group, small and medium-sized businesses (SME's) that use performance-based online marketing fall into three distinctive groups, based on the age or maturity of their business, their use of the technology and their preference for measuring actual results.

A report released this week lists three segments of the small and medium-sized enterprise (SME) marketplace most inclined to adopt performance-based Internet marketing -- newer businesses, "tech-forward" organizations, and direct mail marketers.

"People speak of a 'small-business market,' yet in essence there is no such thing," said Neal Polachek, senior VP of research and consulting for The Kelsey Group. "While there are common SME characteristics, there is also remarkable diversity.

What this report reveals is that there are certain categories of small businesses that are much more likely to adopt online marketing than others."

The report found that businesses that have been in operation less than 10 years, especially service-based ones, embrace performance-based marketing online.

These businesses typically generate fewer revenues, but allocate more dollars to marketing compared with more established businesses and even young product-based businesses, Polachek said. For this reason, they are generally interested in measurable advertising vehicles to ensure an efficient return on investment, he said.

"Tech-forward" SMEs, with high-speed Internet access and a Web site, tend to utilize technology to its fullest extent, the report found.

These businesses show no signs of relying on traditional advertising and marketing approaches, according to the report.

The Kelsey Group analyzed the data and found implications that the use of direct mail by a small-business marketer may be a signal that a business owner is more oriented toward measuring media performance.

Therefore, this group tends to be more inclined to devote resources to media that can show a demonstrable and dependable positive rate of return, such as performance-based online marketing, Polachek said.

Source: ClickZ