• by Laurie Sullivan  @lauriesullivan, August 20, 2009

Small and medium-sized businesses (SMBs) decreased the amount spent on advertising and promotions by 23.5% to $2,092 this past year, compared with the previous year, according to a study released Thursday.

The Kelsey Group's study, "The Local Commerce Monitor Wave XIII," suggests that the penetration of digital and online media rose to 77% in August 2009 -- up from 73% in August 2008 -- while traditional media declined to 69% from 74%, respectively.

Despite the overall decline during the past 12 months, on average SMBs increased spending on Web sites and profile pages by 26.8% to $769 in 2009, up from $608 in the previous year. The study also suggests an increase in SMBs using the Internet to track or measure sources of new business leads. Of businesses that track lead sources, the percentage that taps the Internet via clicks or e-mails rose to 30% in 2009, up from 22% in 2008.

As a percentage of total advertising for the SMBs surveyed, digital and online increased from 22% to 36.8% during the past year, according to the study.

While it's no surprise that small and medium-sized businesses have accelerated the shift to digital and online advertising, taking money from traditional media, Steve Marshall, director of research, The Kelsey Group, says "it's the degree in which the shift is happening, because last year the SMBs told us contributions to both online and traditional advertising would remain about even."

It's no surprise that this year's study suggests SMBs have hunkered down to hunt for new customers and retain existing ones. More are experimenting with video advertising, and some with mobile, and others have ventured into contextual targeting ads. Behavioral targeting, which relies on browser cookies and Web site page code, remains a bit complicated and out of reach.

About 18% of the SMBs participating in The Kelsey Group study use blogs, which remains flat from the year-ago study.

While Marshall chose to keep some details from The Local Commerce Monitor Wave XIII study under wraps until mid-September, he did say that SMBs have increased their use of directional media that targets specific consumers to take action, email and direct marketing.

The study released August 2008, suggests that 9% of SMBs bought pay-per-click (PPC) advertising -- up slightly this year. Last year's study also revealed that 40% used search engine optimization (SEO) to make it easier for engines to find, index and serve up their sites. "In this year's study, the use of pay-per-click advertising was weaker than expected," Marshall says, but more companies with Web sites or business profiles are using SEO.

The latest wave of BIA/Kelsey's Local Commerce Monitor study was conducted with research partner ConStat. The study defines "penetration" as the percentage of SMBs using a given type of media, regardless of spending level.

The survey, conducted at least once yearly since 1999, provides insight into 40 questions, covering subjects from media budgets to sales channels. The sampling comes from 300 companies.