For some time now, we have recognised the sagging economy. Still, nobody seems to have anticipated the sudden slump in online activity by small and medium businesses, even though these tend to be the most vulnerable to any downturn.

Last month’s MYOB Business Monitor, published by the provider of business management solutions, reveals a “notable fall across online business activity,” even though more SMEs today have websites, compared to March.

“The decline in popularity of online business activities was completely unexpected, particularly that of online marketing and social media,” said MYOB CEO Tim Reed. “Many of these tools, such as a basic LinkedIn page, are free and can be used to raise the profile of a business and to communicate with customers.”

Downturn leads to drift

The Business Monitor, which surveyed 1,004 SME operators, found online business activity such as online transactions, email marketing and social media to be in decline. Less than a quarter (24%) used search engines to promote their business, down from nearly one-third (31%) in March. Social media activity on Facebook, YouTube and Google+ fell three percentage points to 15% and professional networking on LinkedIn fell six percentage points to 13%

Reed unequivocally links the decline to the broader business downturn.

“We also found more business operators are experiencing revenue falls than are experiencing rises, and the majority lack confidence in a short-term economic recovery,” he said. “I suspect this has seen many shy away from online activities as they focus on the health of their business, whereas embracing them could reap productivity benefits.”

The silver lining in the online landscape came in the form of higher adoption of websites by SMEs. The survey found a modest rise in businesses with a business website – from 36% in March to 38%. The benefits are a no-brainer in today’s age.

More than one-third (37%) of SMEs with a business website reported increased customer leads and 34% reported improved customer interaction. A third enjoyed better conversion of leads to sales, 32% reported higher revenue/income and 30% believed the website helped them compete effectively.

“With Australia’s Internet audience reaching 16.2 million in May 2012 it surprises me that so many business operators have not yet realised the value of having a simple website containing their contact details,” said Reed, whose company offers the Getting Aussie Business Online initiative free for the first 12 months. “Websites are a great way to attract new customers and to keep existing customers loyal, which can only have a positive effect on cash flow.”

Incidentally, the survey identified the top three reasons why some SMEs didn’t set up a website. They were:

• 68% said they prefer to advertise and market with other methods
• 66% said ‘it’s not a priority right now.”
• A surprising 60% said they still “don’t see any value in having a business website.”

Among other findings, the survey revealed Victorians to be the biggest users of social media for business, at 19%, down from 24%. New South Wales placed the lowest faith in social media – only 11% connect via Facebook, YouTube or Google+.