SMBs Up Ad Budgets For Digital Media

by Gavin O'Malley, Feb 28, 2012, 3:54 PM

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Showing power in numbers, small and medium-sized businesses (SMBs) continue to increase their share of digital advertising.

Over the next 12 months, SMBs plan to allocate 26% of their budgets to digital and online media, according to Local Commerce Monitor, BIA/Kelsey’s 15-year tracking study of SMB advertising spending, media usage, Web presence and sales channels.

As a whole, SMBs are particularly interested in self-serve advertising and promotional tools, including video, social media and search engine marketing.

“SMBs love the easy-to-use tools, like YouTube, Facebook, Twitter and self-serve advertising,” according to Matt Booth, SVP and program director of Interactive Local Media at BIA/Kelsey. “We are on the verge of a real revolution in marketing platforms that serve SMBs, in particular around digital presence.”

According to LCM Wave 15, nearly half of respondents -- 49% -- reported that they purchase online advertising, including SEM products, directly from a Web site -- either with or without live operator assistance.

More than half -- 52% -- of LCM respondents reported that they use social media to promote their businesses, while 22% said they plan to have a video on YouTube in the next 12 months. 

According to a new U.S. SMB Spending Forecast by BIA/Kelsey, small and medium-sized businesses will continue the recent trend of shifting their marketing budgets to digital advertising, performance-based platforms and customer-retention business solutions over the next five years.

Late last year, BIA/Kelsey predicted that SMBs would allocate 30% of their marketing budgets to traditional advertising by 2015 -- down from 52% in 2010.

That would leave 70% for digital and online media, including mobile, social, online directories, online display and digital outdoor; performance-based commerce, including pay-per-click, deals, and couponing; and customer retention business solutions, including email, reputation and presence management.

In sheer dollar terms, U.S. SMB spending on media, marketing and business solutions will grow to reach $40.2 billion by 2015 -– up from $22.4 billion in 2010 -– according to BIA/Kelsey. If accurate, that would represent a compound annual growth rate of 12%.

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