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IRX 2013 Small businesses seeing more returns from social than PPC: study

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Ahead of our annual Internet Retailing Expo – IRX 2013 – we’re running a series of previews looking at the highlights of the event. Today we feature news from IRX exhibitor Sage Pay, which recently published a report showing that social rather than PPC was proving key to success for small businesses.

Small online businesses in the UK that invest more in Pay Per Click (PPC) than other marketing methods are reporting dwindling profits, according to IRX exhibitor Sage Pay.

The third annual Sage Pay e-business Benchmark Report of 1500 online businesses in the UK shows that driving traffic through PPC, whilst remaining top choice for businesses, drives less business transactions than when compared to those that invest more in social media and optimising sites to convert sales.

PPC claimed the majority of the marketing budgets in 2012, however the most successful businesses were found to spend less on PPC (27% of budget) – while their less successful competitors spent 10% more (35% budget spend).

By contrast, investing in engaging customers through social platforms proved to yield better results – companies posting higher profits spent 25% of their budget on social media compared to 19% for those whose profits lagged in the last year. Additionally a huge 73% have optimised their site for m-commerce, with increasing investments made in on-going optimisation and app development.

Simon Black, chief executive of Sage Pay, said: “It is a highly competitive market and the disappointing January sales figures show just how important it is to convert at the final hurdle.

“Our research shows that more profitable businesses are finding alternatives to drive traffic to their sites, through social media, and mobile optimisation. With 28% of small businesses losing most transactions at the final payment stage, investing in new channels that engage at all points of the customer journey is essential. Those that do not look to new channels and methods to engage their audience, will really suffer this year.”

Online businesses that work hard both to get customers to their sites and convert them are the most successful. Some 31% of businesses see offers as the biggest driver for sales conversions, with a range of payment choices coming second (18%), and fast delivery times and minimal checkout pages following suit at 14% and 12% respectively.

In terms of overall marketing spend, the research reveals that small e-businesses spend between 1% and 10% of their total revenue on marketing, with 59% of high-performers in this range. Interestingly, only 20% of companies with equivalent success spend higher than this figure (between 10-20%), which shows that spend and success in marketing are not necessarily linked.

Black said: “Getting the basics right, coupled with the best placement of investment and effort, is key to business vitality. The amount companies spend on marketing is not the issue – what matters is looking at new ways to reach customers and making sure their journey through the site to sale is well thought through and compelling to reduce friction and boost conversions.”

*Sage Pay has defined a small e-business as one conducting fewer than 5,000 transactions per quarter and a large e-business as transacting over 5,000 transactions per quarter.

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Sage Pay is one of the more than 150 suppliers taking part in the exhibition at IRX 2013. IRX 2013 also boasts a conference stream featuring expert speakers across six conferences, 12 practical, hands-on workshops and features the Innovation TV Studio.

IRX 2013 is held at the NEC in Birmingham on March 20 and 21.

Follow our series for regular updates on what’s to come at IRX 2013.

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