Small And Medium-Sized Businesses Increase Digital Spend

Small- and medium-sized businesses are finally embracing digital in a big way, new research shows. Indeed, in less than a year, SMBs are on track to spend a greater share of their marketing budgets on digital than on newspapers.   

That bold prediction comes courtesy of Greg Harmon, senior research analyst at Borrell Associates, who said the shift will mark a major milestone for SMBs nationwide. "It represents a sea change,” Harmon said on Thursday. “The industry has been waiting for this to happen for a long time.”

About 22% of the money that SMBs devote to marketing currently goes to newspapers, while about 19% goes to digital channels, according to Harmon. By his estimate, those percentages are likely to shift in digital’s favor by mid-2014. Driving the swing is the continued decline of print, combined with new digital marketing opportunities.

No company is more responsible for SMBs' embrace of digital than Facebook, according to Harmon. “Eighty-three percent of SMBs are using Facebook, and that number will only increase,” he said. “It just blows my mind.”

For comparison's sake, 64% of SMBs reported using Facebook as a marketing channel two years ago, Borrell finds. By contrast, Harmon believes Google's share of SMB budgets has reached what he calls a “stagnation phase.” 

“Google appears have topped out, while the roots of Facebook just seem to be getting deeper and deeper into digital culture." Asked about recent reports of Facebook's falling out with younger users, Harmon said it hardly mattered. “Facebook is too big -- and established with too many users -- to be affected by [younger users'] tastes.”

Faring even worse than Google is Groupon, and other once-hot daily deal services, Harmon noted. Among all SMBs, 77% report zero participation with such programs, according to Borrell. Of those SMBs still daily dealing, only half report being satisfied with the results.

“The whole [daily deal] sector is toast,” according to Harmon. “Consumers like the deals, but they’re too much trouble for businesses." For its latest findings, Borrell surveyed about 900 small business owners this summer.

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