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What’s Driving Growth in SMB Marketing Expenditures?

by Editor

To understand where the opportunities in digital are, we need to take a look at trends in SMB marketing expenditures.

Borrell Associates runs the largest survey of local advertisers in North America, which means they know what advertisers are doing, predicting, and how they’re acting on predictions.

Here’s a broad-strokes look at what the data tells us about the marketing landscape in 2018:

  • Advertising is forecast to rise 5.3% overall, but the tide isn’t rising for all media.
  • Traditional media (non-digital), especially print and broadcast, is projected to decline by 2.2% while digital media should increase 12.7%, or 126.8 million dollars.

So, there’s plenty of growth in digital…but surprise:

It’s NOT coming from advertising:

This chart demonstrates the difference in SMB expenditures year to year. You can see that the blue line (local advertising) is projected to remain relatively flat, while the orange line (local promotions/marketing) is projected to grow significantly through 2021.

So, what’s happening here?

Now that business owners are not seeing the results they once did in traditional and digital advertising, they’re looking to spend their marketing budgets elsewhere for the foreseeable future.

Gordon Borrell says this data shows that,

“(SMBs) are spending less and less and less on this media that’s owned by other people, and they’re spending more and more and more on this medium than they can actually control themselves.”

This indicates exactly where the true opportunities are in local marketing…

Where SMBs Are Investing Their Marketing Budget

Business owners are investing in marketing services.

And they’re investing a LOT of money—even tiny local businesses are laying down thousands annually for key elements of the local marketing stack.

Let’s take a look at a few key solutions that SMBs are focusing on…

  1. Email Outsourcing

Email outsourcing is a big chunk of SMB spending.

For all local advertisers in an average year, about $3,300 a year was spent on email outsourcing. But you can see that some key verticals spend quite a bit more on email marketing than others.

Email continues to be a great platform for local businesses to reach their audience—with promotions, contests, newsletters, and more. In fact, email marketing averages an ROI of $38 on every $1 spent, which makes it the most powerful marketing communications tool when it comes to customer generation.

Look at how much these local businesses are spending on email marketing.

There’s a huge opportunity for you to get them to invest in YOUR email solutions rather than an email marketing provider, which 56% of companies currently use.

  1. Website Outsourcing

Website design and upkeep is another major expenditure for local SMBs.

They’re spending over $18,000 a year on it, on average. That’s SO much for these SMBs!

This is another big opportunity for local marketers to jump in and help with the immediate need and beyond, according to Borrell:

“What we’re finding in this particular category is that whoever is serving them in this area, the advertisers actually see their own website (or mobile responsive site) as advertising. So, if they equate that as advertising, don’t you think the person who handles that for them is in a great position to give them advice on their marketing?”

  1. Social Media Outsourcing

Social media outsourcing has experienced a surge in expenditures in recent years. Even tiny businesses with 10 or less employees spend $10,154 on social media.

This is another area where it really pays to understand what SMBs in specific verticals need. Case in point, realtor agents spend half as much on advertising as the typical advertiser but nearly 2x the average on managing social media.

Plus, a big chunk of SMBs (32%) invest in social media only. Not only is that 32% of small business clients that you’re currently missing out on if you don’t offer social media services, it’s a group of businesses you can UPSELL with other products!

Why You Need a Mix of Marketing Solutions

As we’ve seen, SMBs are spending more money than ever on digital marketing services.

However, this doesn’t mean they’re buying isolated digital solutions, and it doesn’t mean they’re totally abandoning traditional media like T.V., radio, and newspaper ads.

They’re actually buying a mixture of everything.

Gordon Borrell found that a large percentage of SMBs are investing in a mix of solutions:

“74% of advertisers aren’t buying one or another media, they’re buying a mix. This is where YOUR role comes in to help advise them and help them understand what’s going on.”

Perhaps even more revealing, only 3% of SMBs used digital only, and only 22% used traditional only. The takeaway from this is pretty clear: If you want to be your client’s go-to local marketing expert, you need to offer a mixture of marketing services.

Why SMBs Need OUR Help De-Muddling Their Marketing

Business owners have a lot of marketing tools at their fingertips.

Social channels like Facebook, Twitter, Instagram, and Snapchat are free widely used. Boosting Facebook posts is probably TOO easy, and anyone with a credit card can launch a search campaign on AdWords. Almost everyone can take their own photos or videos with their smartphone. Even a new website is a few clicks away with the rise of website builders.

However, just because digital is so accessible to the masses doesn’t mean that the people running these SMBs understand how digital marketing works.

To put it another way, just because you CAN DIY doesn’t mean you SHOULD DIY.

To drive this thought home, Borrell found that 72% of the businesses surveyed are novices. They don’t really have marketing expertise, they’re making marketing decisions on their own (or with their wife, son, or relative), and they need your help!

In fact, marketing actually takes time away from their core competencies, notes Borrell:

“They’re too busy fixing leaks, making flower arrangements, and serving meals, and selling cars, and selling furniture to really understand digital marketing.”

“They’re spending SO much time and they need SO much advice in this area. They’re looking for experts to help them.”

Marketing is such a huge opportunity cost for that 72% of business owners who are novices at marketing. The need for marketing takes an average of 12 hours a week of their time away from the things they’re best at. Then it forces them to spend that time doing something they’re inexperienced at.

It’s a HUGE time suck!

“It’s such a great time to be in this business if you know what you’re doing, have great products like we have, and are able to offer SMBs real insights and some real help.”

Tim Glynn
Founder, Adodo Consultancy Services Limited

How we Sell Based on SMB Needs

Our clients want results. That’s a given.

But there’s more to our relationship than that.

Businesses need a partner with a specific set of skills and values. Here’s what they’re saying they need (quotes from Borrell data):

Be Honest:

“Be open and honest about advertising effort, ROI, and metrics. Often, I feel like our advertising partners just want our money and don’t care if our ads are working for us.”
Borrell Survey Respondent
SMB Owner

Honesty is easy when things are working. When a key campaign is struggling it becomes more difficult to report back to your client that things aren’t going as expected. Being honest in those situations is essential if you want to maintain a lasting relationship with your clients. They’ll need to know your honest opinion on what went awry and how to plan to move forward.

Provide Data:

“Have more relevant/detailed data specific to my industry and audience.”
Borrell Survey Respondent
SMB Owner

Data drives many of the decisions we make as marketers, and SMBs are not blind to the effect that data insights have on the success of their business. Make sure you’re sharing relevant data with them and help them interpret what that data means for their business.

Educate Them:

“Educate us on the trends/metrics and experiences of similar businesses to us in the local area.”
Borrell Survey Respondent
SMB Owner

If you want to keep your clients for the long term, you need to be integral to their business. Be the guide. Be the trusted local expert and educate them about how they can be successful in their market. The better job you do, the more likely it is they’ll understand your value and implement your ideas in ways that’ll make the work you do more successful.

Cut the Crap:

“Media partners are focused on hitting sales goals and will only present data that supports their products, and NOT what’s truly in the advertiser’s best interest. In 12 years of being the marketing director, on only two occasions has it happened that a media partner did not recommend their products for my dealerships…. All have data that shows their products are superior to their competition. They can’t all be right; therefore, it leads to doubt.”

Borrell Survey Respondent
SMB Owner

Don’t sell against everything! You don’t always have the best option for your clients, and they’ll trust you a LOT more when you offer unbiased advice that’s in their best interest.

Final Thoughts

SMBs have options, they have tools, they have data, but they’re still confused.

They don’t trust advertising to deliver healthy ROI anymore and they’re looking for better options.

Enter, Adodo Consultancy Services Limited, Your Digital Guide.

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