One of the challenges that marketing providers and agencies experience in working with small and medium-sized businesses (SMBs) is making the most of limited marketing and advertising budgets. SMBs have traditionally been known for spending little on their marketing efforts, but a new study suggests that this may be changing.
According to a new HubShout survey of over 100 small to medium-sized online marketing agencies who service SMBs, in 2014 (chart below) 35% of SMB clients spent $500 or less on digital marketing per month and in 2015 (chart above) that number shrunk to just 19.6%. What this means is that in 2015 about 15% of SMBs graduated to higher monthly marketing spend levels.
While the lowest price range featured in the study saw a 44% decrease, and the $500-$1000 range remained basically unchanged, the higher end of monthly spending ranges all saw increases. The largest increase occurred in the $2501-$5000 range, which jumped about 5 percentage points.
Despite the headline, it is difficult to extrapolate that all SMBs are spending more on digital marketing using the data from this survey alone. This particular study looks at “clients” of these agencies, so they must be spending something. However, there is still a portion of SMBs who spend nothing on digital marketing.
A more accurate conclusion drawn from this study might be that SMBs who already spend money on digital marketing are starting to spend more. As to the “why” of it all, that is where it becomes even more interesting.
Such a growth in SMB monthly marketing budgets as this study identifies, suggests a shift in the way these SMBs see digital marketing. When “lack of perceived value” has been one of the common knocks against digital marketing, the increase in spending from 2014 to 2015 challenges that sentiment.
Still, many studies continue to show that SMBs aren’t sure how effective marketing tactics are. Earlier this year, a survey of 1,000 U.S. SMBs from InfusionSoft and LeadPages showed that 62% of SMBs don’t know if their marketing works. But this doesn’t appear to be hurting SMB marketing spend as the study goes on to show that about half of SMBs will be increasing spend on websites, digital advertising and social media this year.
When comparing the two studies we see that despite the continuing challenge of identifying ROI, SMBs are spending more on marketing, especially via digital channels. Is this what you are seeing in the SMB marketplace? If so, what do you think is causing it? If not, what is getting in the way?
8 Responses
In regards to SMBs seeing the effectiveness and value in digital marketing, I think they need to have a strong marketer backing them up and explaining the importance to them, as well as the processes and why things need to be done. I’d wager to say that most of the reason SMBs hire a marketing firm is because they don’t know what they’re doing, how to track or measure it, what trends to look for, or even know to be aware that changes are constantly happening in this field.
Marketers should be teaching their clients why digital marketing matters, and then maybe if the SMB felt included and confident in the knowledge of where their money is going, they might spend more.
Most marketing firms that work with SMBs are today trying to do “education.” Many of them don’t provide good service though — it’s expensive and many of these accts aren’t big. ROI is tough b/c many SMBs don’t look at analytics so clear “real world” or “business objectives” metrics need to be provided — visits, bookings, sales, calls, etc.
There really is no channel that allows you to reach a wider audience than online marketing. The vast majority of people are traversing the internet constantly throughout the day, leaving a lot of opportunity for gaining exposure.
Right but “the internet” is itself made up of multiple “channels” and platforms.
I think that SMBs are feeling the need to spend more on marketing in order to keep up with their competition. Digital marketing allows for maximum visibility, and the money invested in it should lead to an increased client base and, ultimately, more sales.
Testify!
The constant fight against “lack of perceived value”.
Great Piece. SMB’s are the nut everyone wants to crack right now.
Given the competition for the types of businesses that benefit most from local online marketing, there’s no better way to get into people’s, phones and desires for services than to use online marketing in local search.