Local media companies looking for greener pastures have turned to Main Street shops, hoping to find gold. Companies like Groupon went from zero to more than $400 million in a year’s time just by targeting smaller businesses – sending everyone else rushing in to sell deals-type programs, hyperlocal banner ads, search engine optimization, and everything else under the digital sun. In our survey of 2,872 small and medium size businesses (SMBs), we found that they plan to increase their ad budgets 4.5% this year, but their online budgets 29%. The biggest gainers: email and social media advertising, including spending on their own websites. While 86% of SMBs reported having a website last year, that’s expected to go to 91% in 2011 – meaning there are very few left without a web presence. The big question now is how to gain attention, which is where local media companies come to play. This 55-page report delivers insights into SMB spending habits both online and offline, as well as their intentions in increasing spending. It also offers an appendix detailing how 35 SMB categories – from auto-repair shops to restaurants to sporting goods stores – are spending online, including how much each spends on banners, email, video, and paid search.
It used to be that an expensive lunch, a round of golf or even a deep-sea fishing expedition was all it took to ply big bucks from advertisers. But now that the bigger advertisers seem reticent to buy on relationship and more interested in discussing ROI, the greener pastures are with those once-overlooked smaller advertisers. And they’ve quickly become everybody’s new best friends.
It’s easy to see why. Smaller businesses control 83 percent of all local advertising — but that’s only because there are so many of them, not because they’re big spenders. The average small business spent just $11,740 on advertising in 2010, about $2,300 of it online.
How to reach them is on everyone’s mind, which is why small and medium businesses (SMBs) now get an average of 22 sales calls per month. The pitches from online ad-sales reps have built to a cacophony. SMBs are being offered deals programs, online coupons, website banner ads, search engine optimization, splash pages, targeted Facebook ads, email advertising, reputation management, online directory ads — all amounting to an entirely new vernacular bound to make their heads spin. It’s no wonder that only 1 in 5 of those calls per month gets returned, according to our survey of 2,872 SMB owners.
Currently, 86 percent of SMBs have their own website. We’re expecting that to increase to 91 percent this year. It’s obvious that they consider their websites to be their own personal advertising medium; when we asked small-business owners about their plans for online spending 2011, the No. 1 choice for increasing spending was their “company website.” That’s bad news for their once-favorite media venues — yellow pages, direct mail and radio. While SMBs say they plan to increase their online advertising budgets 29 percent this year, they foresee increasing their offline media buys by 4.5%.”
The biggest shocker is that 70 percent of these small businesses are already spending on social media. And one in three of them plan to increase that spending this year.
That last point may be the most important insight. About two-thirds of SMBs who have a website also maintain “a social network site or page.” Among the 14 percent of SMBs that do not have their own website, more than a third have a social network site as well. Arguably, the social networks have become attractive to businesses not yet ready or able to put their storefronts on the Web. Two-thirds of the SMBs interviewed said they use them to communicate directly with customers.
It’s difficult to generalize about SMBs because there are just so many of them (more than 14 million of the 15 million businesses in the U.S. are classified as SMBs), and because the definition of a small business can vary. This report offers an appendix that includes an analysis of 35 individual SMB categories, showing a great level of detail on offline and online spending, including formats like email, banners, video and paid search — as well as spending levels on online promotions. SHOW LESS READ MORE >
CHAPTER 1 BACK TO THE FUTURE
Fig. 1.1: Most SMBs Talk to Only a Few Ad Salespeople Per Month
Fig. 1.2: The Four Stages of Business Marketing Activity
Fig. 1.3: SMB Share of U.S. Business Locations and Employees
Fig. 1.4: SMB Share of 2010 U.S. Ad Spending
Fig. 1.5: 2010 SMB Online Ad Spending Compared to U.S. Totals
Fig. 1.6: Growth Expectations Highest for Online
CHAPTER 2 WHAT SMBS PLAN TO DO ONLINE
Fig. 2.1: Web, Email & Social Media Top SMBs’ Planned Spending Increases
Fig. 2.2: BLS JOLTS U.S. Non-Farm Job Openings, 2007-2011
Fig. 2.3: SMB Marketing Spending – 2010 vs. 2011 (forecast)
A FINAL NOTE