turbocharged - 3:18 pm on May 12, 2013 (gmt 0)
Still - I think penguin 2.0 is going to decimate these industries (web dev/SEO) in my opinion.
The potential certainly exists for this and lower spending over the last year by small businesses on the web design services that my company offers may be the start of a long-term trend. Reduced gains from optimization services may also cause these companies to conserve and/or reallocate these budgets to other areas that provide a great ROI. If half the front page of the serps are ads and major brands, it's hard to believe any amount of onsite or offsite SEO will benefit certain industries (ie. can't rank organically above paid ads).
Many SMBs will simply give up on a web presence I believe.
Some certainly will. But others, as I am seeing now, are spending more on offline advertising (television, print, etc.). If Google shuts out small businesses from the serps, in favor of large brands, some businesses will continue to explore/expand other methods and locations (ie. Facebook). Some will also increase their PPC advertising budgets, but I am seeing a lot of resistance from small businesses that are competing with the same big corporations in PPC that now dominate organic search. PPC is not my area of expertise, but this is what I am hearing when talking with clients.
Although our web design business saw a spike in sales to fix onpage issues (over optimization), this dropped off rather quickly. Net sales are much lower than they were this time last year. Some of this can be blamed on other factors though (poor economy).