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2013 Mid-Year Report Card Small Business Survey

July, 2013

J2 Global’s Annual Mid-Year Small Business Report Card: How SMBs Get Work Done
More SMBs will take a vacation this year; but nearly two thirds of them admit to doing work poolside Small business owners around the country are grabbing their shades this summer as business sentiment calls for a sunny forecast for the rest of the year. The majority of those polled in a new j2 Global (NASDAQ:JCOM) survey (88 percent) are optimistic about their businesses’ growth for the remainder of 2013, compared to 76 percent last year. Click here for an infographic of the survey results. Small businesses are gaining more than just optimism this year. The annual j2 Global Small Business Mid-Year Survey, conducted by j2 Global, Inc (see description of the survey below) — to which more than 2,500 small business owners and employees in the United States who are eVoice, eFax, and Campaigner customers responded — reveals additional insights into the forecast for the rest of 2013. Savvy small businesses are also gaining mobility, embracing mobile technology and cloud services to keep their businesses running. In fact, 53 percent could see themselves working entirely from an iPad ® or tablet within the next year. “The modern workforce is more mobile than ever. And whether it’s in the office, on the train, or on the couch, small business owners are pushing forward with increasing optimism,” says Mike Pugh, Vice President of Marketing for j2 Global. “Cloud and mobile solutions are a catalyst within these small businesses, allowing them to work hard, but on their own terms. Tech-savvy owners are forecasting a bright future as they lead the charge in technology adoption and push us toward a more nimble and productive mobile economy.” Vacation, Staycation, or Workcation? Vacations are on the rise: 63 percent of those surveyed have committed to take one vacation this summer, while in a similar survey conducted by j2 Global in 2012, only about half (54 percent) of small business owners planned to take a vacation. Getting away doesn’t mean leaving work behind, however, as nearly two-thirds (65 percent) of those who are taking a vacation plan to bring their work along with them. Hardest working is Generation X, with 43 percent of those ages 34-48 planning to work during vacation, compared to only 34 percent of millennials (age 33 or younger). Boomers (ages 49-67) fall right in the middle, with 40 percent planning to work during vacation this year. The new productivity hotspot: on a train, on a plane… When working outside the traditional office, more than one in three (34 percent) small business owners say they’re most productive while commuting to and from work — whether their commute is in the car, bus or on a plane. That’s good news for the more than one in four (27 percent) respondents who travel at least once a month for business. Outside the office, women consider downtime their prime work time as TV provides background noise for catching up on email: 32 percent of women say they are most productive outside the office while relaxing or watching TV, compared to just 27 percent of men.

Look Out Social Media: The King is Back! Small businesses still cite email marketing as their top tool for their 2013 marketing strategies. Search engine optimization (SEO) is a close second, but down from its No. 1 spot in 2012. Social media may be on the decline as well—14 percent saw it as the least important business marketing strategy in 2012, while this year a third of small businesses (33 percent) put social media in their bottom two priorities. Email’s steady marketing presence is mirrored in a recent report conducted by Custora, a marketing analytics platform. The company’s customer acquisition report shows that customer acquisition through email marketing has quadrupled in four years, beating out Facebook and Twitter combined.i Back to the Basics In addition to email’s lead in marketing initiatives, email is also the No. 1 mobile phone activity for small businesses, but it barely beats out the mobile phones’ traditional use – regular phone calls. While some industries are getting back to the basics, mobile business app usage is up over all—34 percent of those surveyed use five to 10 apps for business on a daily basis, compared with only 17 percent last year. Mobile productivity varies across industries as well:  Restaurant: 40 percent of restaurant owners spend the bulk of their time using business apps for activities such as faxing or tracking hours.  Marketing and Advertising: 30 percent of these creative professionals rank business apps like scanning or billing in their top two mobile activities during business hours.  Real Estate and Mortgage: Traditionally an on-the-go profession, 47 percent of respondents in the real estate and mortgage industry stay productive out of the office using five or more apps daily. Twenty-two percent spend the majority of their mobile time texting. The Ever Optimistic Youth: Millennials Make Their Mark As businesses are more optimistic than ever, Millennials remain the most optimistic generation, with 94 percent optimistic for business growth this year, up from 85 percent last year. Optimism decreases with age, but is up across all generations: 91 percent of Gen X and 87 percent of boomers are optimistic—up from 81 percent and 71 percent, respectively, last year. As optimism for business profits increases, so may hiring trends. When it comes to which generation small businesses are most likely to hire in the coming year, 43 percent look to Millennials first; 30 percent would pick Gen X; and 4 percent, Boomers. An infographic showing results of the survey is available here. To imbed the infographic in a blog post or website, copy and paste this code: <img src="http://home.j2.com/2013MidYearSMBSurveyInfographic/2013_MidYear_SMB_Survey_Infographic.jpg" alt="2013 MidYear SMB Survey Infographic">

About the j2 Global Mid-Year Small Business Survey - 2013 Between June 12 and June 25, 2013, 2,536 small business professionals responded to an email invitation from j2 Global to eVoice, eFax, and Campaigner customers to participate in an online survey about hot topics such as the use of iPads and apps, optimism in company’s growth, mobile productivity, and

summer vacation plans. The margin of error is +/- 1.95 percentage points. The statistical figures provided herein may have been rounded up or down.

About j2 Global
j2 Global, Inc. (NASDAQGS:JCOM) provides Internet services through its two divisions: Business Cloud Services and Digital Media. The Business Cloud Services Division offers Internet fax, virtual phone, hosted email, email marketing, online backup, unified communications and CRM solutions. It markets its services principally under the brand names eFax®, eVoice®, FuseMail®, Campaigner®, KeepItSafe® and Onebox® and operates a messaging network spanning 49 countries on six continents. The Digital Media Division consists of Ziff Davis Inc., which offers technology, gaming and lifestyle content through its digital properties which include PCMag.com, IGN.com, AskMen.com, Toolbox.com and others. Ziff Davis also operates BuyerBase, an advanced digital ad targeting platform and Ziff Davis B2B, a leading provider of research to enterprise buyers and leads to IT vendors. As of December 31, 2012, j2 had achieved 17 consecutive fiscal years of revenue growth. For more information about j2, please visit www.j2global.com. iPad ® is a registered trademark of Apple Inc., registered in the U.S. and other countries.

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[Source: http://blog.custora.com/2013/06/e-commerce-customer-acquisition-snapshot/]

1. How large is your business? Answer Options Just me; I am a business of one I am a microbusiness; 5 or fewer employees Between 6-10 employees Between 11-50 employees More than 50 employees Response Percent 29.3% 37.9% 11.4% 11.6% 9.8% Response Count 744 962 288 293 249 2536

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2. How old are you? Answer Options 33 or younger 34-48 49-67 Over 67 Response Percent 12.9% 40.6% 42.5% 4.0% Response Count 326 1030 1079 101 2536

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3. What industry is your business in? Answer Options Real Estate/Mortgage Retail Advertising/Marketing Technology Education Financial Services Consulting Restaurants Medical Legal eCommerce Non-Profit Publishing Other (please specify) Response Percent 12.2% 13.8% 8.1% 10.5% 3.2% 9.8% 13.4% 1.8% 8.9% 6.2% 4.3% 4.8% 3.0% Response Count 309 351 206 267 81 249 339 45 226 158 109 121 75 759 2536

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4. What is your gender? Answer Options Male Female Response Percent 59.3% 40.7% Response Count 1503 1033 2536

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5. How many apps do you actually use to run your business on a daily basis? Answer Options 0-5 5-10 10-20 More than 20 Response Percent 55.4% 34.0% 8.1% 2.6% Response Count 1404 861 206 65 2536

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6. Outside of your place of work or home office, where do you get the most work done? Answer Options While commuting (car, bus, train, etc.) In a coffee shop, restaurants, bookstores (retail establishments with wifi) While on vacation - at the beach, pool, resort, etc. While running errands While watching TV or relaxing In the bedroom Response Percent 34.0% 15.2% 3.4% 8.8% 29.5% 9.1% Response Count 863 386 85 224 747 231 2536

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7. How often do you travel for business? Answer Options Almost never Once a year 2-5 times a year Almost monthly Weekly Response Percent 23.9% 11.3% 37.6% 15.6% 11.6% Response Count 606 286 954 395 295 2536

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8. Could you see yourself being able to work entirely from an iPad or tablet in the next year (in place of a PC or laptop)? Answer Options Yes No Response Percent 53.5% 46.5% Response Count 1356 1180 2536

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9. Which generation are you more likely to hire in the coming year? Answer Options 33 and younger 34-48 49-67 None of the above Response Percent 43.1% 30.2% 4.3% 22.3% Response Count 1094 767 109 566 2536

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10. Are you optimistic about your company’s growth for the rest of 2013? Answer Options Yes - very optimistic Yes - but cautiously optimistic No Unsure Response Percent 45.9% 43.1% 4.6% 6.4% Response Count 1164 1092 117 163 2536

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11. Are you taking a summer vacation this year? Answer Options Yes, and I’m not planning to work during vacation Yes, but I’m going to still work during vacation No I’m not taking a vacation; I have too much work to do I’m not sure yet Vacation? What’s that? Response Percent 22.0% 40.5% 15.8% 13.0% 8.6% Response Count 559 1028 400 330 219 2536

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12. Small businesses owners often wear multiple hats and serve many employee roles at once. As a small business owner with many responsibilities, which is your favorite hat to wear? Answer Options Managing my team Working with customers/customer service Financial management (payroll, taxes) Human Resources (interviewing, hiring, paperwork) Sales and marketing Response Percent 16.9% 45.1% 5.7% 1.6% 30.7% Response Count 428 1144 145 41 778 2536

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13. Rank in order of importance the most important factors of your marketing strategy this year with 1 being Least Important and 6 being Most Important. Answer Options Email marketing Search Engine Optimization Catalog Direct mail Social Media (Twitter, Facebook, LinkedIn) Mobile 1 - Least Important 372 355 1593 1110 532 526 2 186 249 377 465 316 329 3 307 338 234 338 432 409 4 366 391 146 218 401 382 5 505 461 100 203 455 371 6 - Most Important 800 742 86 202 400 519 Rating Average 4.12 4.02 1.83 2.43 3.45 3.51 Response Count 2536 2536 2536 2536 2536 2536 2536

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14. Rank, in terms of most important to least important, what entrepreneurial advice you would give someone starting a business in the next year? (Rank in order of importance, 1 being the least important and 5 being the most important) Answer Options Make sure you have a padded savings account Don't hire your friends or family Go virtual - use cloud services to cut costs Make time for yourself a priority Don't do it - not worth the risk 1 - Least Important 82 363 166 160 1745 2 255 606 358 346 368 3 520 648 676 610 286 4 613 488 782 766 74 5 - Most Important 1066 431 554 654 63 Rating Average 3.92 3.01 3.47 3.56 1.56 Response Count 2536 2536 2536 2536 2536 2536

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