Australian small businesses that use social media as part of their online business strategy are more likely to achieve greater revenue returns from their websites than those that don’t, according to a new research report launched by Melbourne IT.

The inaugural Melbourne IT eBiz Review, which polled 3,404 Australian small and medium sized businesses (SMBs) with an online presence, found that SMBs able to generate 20% or more of their revenues directly from their websites were more likely to use social media, with 39% of ‘social media’ SMBs achieving this revenue level compared to only 23% of non social media SMBs.

Fifty-three per cent of social media SMBs achieved the 20%+ revenue level while only 38% of non-social media SMBs did. In other words, SMBs likely to invest in social media were also more likely to generate 20% or more of their revenues online.

Given the survey found only 34% of SMBs with an online presence (or ‘eSMBs’) use social media, the potential for the majority of small businesses to consider how they can benefit from social media is significant.

The eSMB respondents which did not use social media said they were unconvinced of the benefits (36%), social media was irrelevant to their business (32%), and they had no time to maintain a social media presence (28%). However, 15% of non-users said they planned to include social media in their online strategy in future.

“We think the correlation between eSMBs’ social media use and higher revenues from their websites will certainly encourage a lot of small businesses to reconsider how they can use social media tools to help their business,” Melbourne IT’s SMB eBusiness Solutions executive general manager, Damon Fieldgate, said.

“However, it is not as simple as setting up a Facebook page and hoping for the best. SMBs need to think about how social media fits into their online strategy and seek advice where necessary to integrate social media tools with their existing online investments to ensure success,” he said.

Internet presence considered vital to SMBs

The results around social media use were just one element of the study, which found a strong reliance on the Internet to do business and a willingness from eSMBs to innovate to drive online success.

The majority of eSMBs believe ‘the Internet is vital to the operation of my business’, with 82% agreeing or strongly agreeing with the statement. Forty-five per cent agreed or strongly agreed that an increasing amount of their business’ revenues were derived online, and 52% agreed or strongly agreed that the Internet and email were the primary marketing tools for their business.

“We were really encouraged by the results of the eBiz Review as it paints a picture of a confident and innovative online small business sector which is using the Internet in smart ways to create competitive advantage. Small businesses are embracing the Internet to help them unlock growth and succeed,” Fieldgate said.

Mobile applications the next frontier?

With mobile web browsing on the rise, 7% of eSMBs said they were working on a mobile optimised version of their website, with an additional 20% considering doing the same (9% of eSMBs said their website was already optimised for mobile browsers).

However, 23% of eSMBs were either considering developing a mobile app or already had one in development.

“Given the time, cost and effort in developing a mobile application, we weren’t surprised to learn that only 3% of eSMBs currently had a mobile app available to download. But the large number that are looking to create their own mobile app was an eye-opener. It shows a willingness to innovate and that small businesses are not about to let the growing wave of mobile web users pass them by,” Fieldgate said.

While 47% of eSMBs disagreed or strongly disagreed that the barriers to setting up an online business were too high, they still saw obstacles. eSMBs said the biggest challenges were the cost of maintaining their website (47%), being found in search engines (44%) and understanding how to do business online effectively (35%).

Confusion over Cloud Computing

There was also some confusion around new technology concepts, with only 46% of eSMBs saying they understood what was meant by cloud computing. Most eSMBs are not using cloud computing services (74%) and of those who are not, only 6% are planning to invest in cloud this financial year. Conversely, the proportion of eSMBs who are using cloud computing (16%) seem to be ready to embrace it further with 65% of these respondents planning to invest in cloud in 2010-11.

“The results seem to indicate that SMBs who use cloud computing services are embracing it further, while those who aren’t see no need to change their minds at this stage. It’s clear that many small businesses are not blinded by the hype around cloud and want to see clear proof of benefits before they decide to change the way they run their IT to a cloud model,” Mr Fieldgate said.

“However, the fact that cloud users are re-investing should be reason for SMBs to take another look at cloud computing to see if it could enhance their operations.”

The full Melbourne IT eBiz Review is available for download.