Ad-ology Finds Small Business Plans To Spend 'More Or The Same' On Advertising In 2013
December 14, 2012 at 3:59 AM (PT)
From OCTOBER 26 through NOVEMBER 6, AD-OLOGY RESEARCH conducted an extensive survey of 1,439 small business owners and decision makers to learn more about their attitudes towards advertising and marketing. Now in its fifth year, this study uncovers the advertising methods that are the most effective for small businesses. Furthermore, it reveals how -- and why -- small business owners allocate their advertising dollars. In addition to traditional advertising, this survey examines how much small businesses understand about digital media, and how they use it as part of their overall marketing strategy.
SMBs Remain Cautiously Optimistic About Sales And The Economy
Good news for the radio station's sales staff, as small businesses are fairly optimistic about revenue projections going into 2013, with 92.5% of them saying they expect their revenue to be flat or up next year.
Heading into 2012, 60.3% projected an increase in revenue, but this year, only 51.9% expect higher sales. Similarly, the percentage of small businesses that project revenue to go down in 2013 has increased 8.7%. However, this is the third consecutive year that more than half of all small businesses are anticipating higher revenues.
While there was optimism going into 2012, the actual results were not quite as positive as expected. At the beginning of the year, 60.3% of small businesses expected revenue in 2012 to be up. However, as the year comes to a close, just 36.4% say that their overall sales in 2012 increased. 39.9% say their earnings have been flat this year, and 23.7% are reporting that their 2012 revenue is down.
Despite the cautious projections of their own revenue prospects for 2013, small businesses are more confident about the overall economy than they have been in the past five years. 32% of SMBs are cautiously or very optimistic about the current state of the U.S. economy, which is a 51.7% increase in confidence over last year.
SMBs Embrace Multiple Marketing Platforms
When asked about the best way to deliver marketing messages to their customers, slightly more than half of small business owners say they prefer to do so on a 1-to-1 basis. 30.3% say that they prefer marketing to smaller, targeted groups of people, and 17.7% find it effective to attempt to reach "as many people as we can."
Spending on advertising in the local media and through signage will remain a healthy 25.1% of the typical SMB marketing budget in 2013. Nearly 40% list advertising as one of the top three ways to find new customers.
However, fewer than 4 of every 10 SMB decision makers say they are mostly satisfied or very satisfied with the return on investment from their advertising efforts -- signaling a willingness to try different media or approaches.
The methods for determining advertising success vary widely among SMBs. An almost equal number of respondents measure the success of their advertising campaigns by tracking increases in leads generated, increases in foot traffic and phone calls, and increases in net sales.
Advertising Projected To Remain Steady In 2013
For the third year in a row, at least 90% of small business marketers plan to spend the same or more on advertising. While 30.5% will increase their ad budgets, 64.1% will maintain their level of spending in 2013.
Just 5.4% plan to spend less on advertising in 2013 compared to 2012. While that number is up slightly from 2012 projections, it still represents a small portion of SMBs. However, the number of those who say they will spend the same in 2013 is 26.2% higher than it was in 2012.
Spending on traditional, mainstream media remains a part of the advertising mix for SMBs, with 22.2% saying their budgets will stay flat or increase for newspaper advertising.18.0% report that they’ll spend the same or more on radio, and 11.1% will spend the same or more buying ads on local television.
7 in 10 small businesses say that the reason they advertise is to attract different customers. 58.3% say they advertise to build name recognition, and 44.2% say that advertising helps develop sales leads and prospects for future business.
Advertising rates are the most important factor for SMBs when they decide which media to use, so it’s not surprising that rates are also a source of frustration. 40.6% of small business decision makers cite "rate increases without justification" as the most frustrating aspect of buying advertising. Slightly more -- 42.0% -- say that it's frustrating when they receive ad proposals that are not relevant to their business.
Online and Mobile Marketing Important To SMBs; Daily Deals Are Not
The Internet is still an important part of customer relations for small businesses, as 68.7% of SMBs say they have a website. The biggest marketing function of their websites is to inform customers of the current products or services the company offers and 1 in 5 use their websites to conduct e-commerce. More than half of small businesses -- 55.5% -- have updated the content on their websites in the past month.
While 23.4% plan to increase their budget for website development, optimizing websites for search engines is another SMB priority, with 20.5% planning for this activity in 2013.
In 2013, 30.5% of SMBs will use mobile advertising or texting. The ability to geo-target prospects is the key advantage of mobile campaigns for 14.7% of small businesses. Small enterprises that apply resources to developing mobile apps and content should find a growing audience of decision makers and other professionals ready to engage with these marketing strategies.
The iPAD now ranks as the second most popular device being used at work. 24.3% of our survey pool reports using the iPAD. Respondents also indicated a growing preference for the iPHONE. Currently, 38.5% of SMB decision makers are using iPHONES, which is a 27.9% increase over last year.
This gain seems to have come mostly at the expense of the BLACKBERRY which has seen a market-share drop from 17.4% to 6.8% in the past year. This shift in the mobile device base will likely guide those who develop mobile apps used by small businesses.
Marketing through Daily Deals, which as recently as a year ago was thought to be a very effective way for small businesses to advertise, has sharply declined. In fact, just 18% of SMBs plan to use firms like GROUPON or LIVING SOCIAL as a way to advertise in 2013. Last year, 55.8% said they would use daily deals. That’s a sharp drop of 67.7% in just 12 months.
Social Media Growth Slowing Among SMBs
Over two-thirds of small businesses use social media as a marketing tool. 64.3% of SMBs plan on allocating more resources -- or as much as they did last year -- on social media in 2013. Still, that number is 24% lower than what was reported going into 2012.
FACEBOOK remains the king of social media for small businesses. 62.4% of social media-using SMBs say it is a beneficial platform to promote their business. LINKEDIN is second, followed by TWITTER, YOUTUBE, and GOOGLE PLUS.
Small businesses use social media for other purposes as well. 42.2% say social media allows them to keep up with their industry, 39.0% use it to improve the customer experience, and 35.3% say social media allows them to monitor what’s being said about their business.
These companies expect their social media usage to have some direct contribution to increased revenue. Almost half -- 47.2% -- use social media to generate leads, and 30.8% say their activity will generate sales. Reflecting their belief in the potential return on investment, 67.7% of small businesses that use social media will spend the same or more than last year advertising on sites like FACEBOOK and LINKEDIN.