SMBs Not Bogged Down By Economy, Plan Ad Spend Increase

Steve Marshall of Kelsey GroupMore than 80% of small and medium-sized businesses (SMBs) surveyed said they plan to maintain or increase ad spending over the next 12 months despite a troubled economy--and they plan to spend slightly more of those dollars online. That's according to the latest findings from The Kelsey Group's Local Commerce Monitor, an ongoing study of SMBs that the research firm conducts in conjunction with ConStat.

About 300 SMBs from around the nation in first- and second-tier markets responded to the 50-question online survey aimed at measuring where and how these business owners are spending their ad budgets, as well as how their media usage is evolving. Respondents said they planned to spend just over 28% of their entire ad budget online in the next year--up 3% from what they spent in the previous 12 months.

"Though the percentage increase is slight, it represents a significant rise in the amount they'll actually be spending," said Steve Marshall, research director at The Kelsey Group. "The data reveal a remarkable resilience of the SMB advertising segment in the face of economic pressures on local consumers and businesses."

The shift to online ads--including email, paid search and Internet Yellow Pages--is driven by an increased reliance on campaign performance and return on investment (ROI) data. For instance, just over 30% of SMBs surveyed said that campaign performance and ROI was the primary influence on their advertising spending decisions, ahead of the input/actions of a business partner or competitor (25%) and information from media such as newspapers, TV and trade publications (14%).

"There's an opportunity for media that can demonstrate ROI to tap into SMBs' future advertising plans," Marshall said. With paid search, for example, 27% of respondents who had purchased search ads in the past 12 months said that the ROI was either "extraordinary" (or over 20 times their spending) or "excellent" (between 10-20 times their spending).

The SMBs also are also increasingly incorporating new media platforms into their marketing mix. For example, 40% plan to add customer reviews to their own Web sites, and 26% will incorporate video. Meanwhile, 30% will tap social media by adding links or placing ads on social networking sites or blogs.

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