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Online Kicks Broadcast’s Butt In Local SMB Spending

August 24th, 2010
8 Comments


The Kelsey Group surveyed “Plus Spenders”, SMBs that spend at least $25K/yr in marketing v. the average of about $2500. According to Kelsey:

· 90 percent of SMB Plus Spenders have a Web site, versus 62 percent for average SMBs.
· Plus Spenders use more types of online media, and spend more for online advertising (well duh): In the past 12 months, Plus Spenders spent 26 percent of their total ad budget on online media, versus 21.8 percent for average SMBs, a difference of 4.2 points.
· Plus Spenders spend an appreciable amount of their total budget on broadcast media: 16.1 percent of their budget is allocated to broadcast media compared with 1.3 percent for all SMBs.

Interesting to see that SMBs are pushing more budget into online v. broadcast. I would have thought that online was growing faster but would still be a smaller % of the budget. Also interesting to see how much more Plus Spenders rely on broadcast v. their el cheapo SMB brethren.



Tags: Local Advertising

8 responses so far ↓

  • 1 Stever

    In my experience local broadcast media (tv, radio, and newspaper) is overpriced and that creates a barrier to entry for the smaller SMBs. Deeper pocketed businesses like car dealerships, real estate agencies, law firms, flooring warehouses, etc… buy up a lot of the available space and create a perceived market price that is just way to high for the smaller guys.

    Some of those local businesses that spend big advertising dollars in broadcast media do so willy nilly to get their name out there, everywhere, anywhere. They are either big enough that branding and/or “top of mind awareness” (which the ad sellers love to push as the reason to be in their medium) actually can be effective and maybe produce a ROI (though they are not or cannot actually measure that) or they simply fall for the trap of “we gotta be there because our competition is there” (which the ad sellers also love to push).

    The top realtors in any given city spend an insane amount of money on traditional local advertising. It does not actually help them sell more homes faster so much as it’s a necessity in creating the perception that they do so much to sell homes which in turn makes for more home sellers choosing them as their agent.

    Those bigger local businesses are the bread and butter for local media. The ad sellers then deal with a high churn rate on trying to sell the rest of the spots to smaller businesses. Some of whom try it for a month or two, but because their budget is small they are not getting quite as much air time as they need to create that brand awareness or top of mind effect, and are paying a higher rate due to their low volume. They end up not seeing a noticeable return and then decide that tv or radio or newspaper does not work, for them at least.

    Those are some of the reasons the Plus Spenders rely on broadcast media more than the little fish do. In general, it’s because they can.

  • 2 Andrew Shotland

    You are right on the money Steve. I recall speaking with a local merchant about his radio campaign. He was very proud of it whenever he heard it on the air. There was clearly a lot of ego involved in the campaign. I don’t recall a lot of SMBs bragging about their PPC campaign that way :)

    That said, I don’t think a lot of these guys over time would use these channels if they didn’t feel like they were getting a real ROI. The smartest SMBs I deal with have tested broadcast in the same way we test online and know fairly well how much business $10K in radio ads will drive.

  • 3 Stever

    yes, ego plays a role for some. Similar online for those SMBs that are proud of the animated flash doorway home page of their website :)

    Yes, some of the smarter big spenders are doing a decent job of tracking their broadcast spend. I’m speaking in very general terms as I see many throw advertising dollars at any wall they can find because they think they have to and not checking to see what actually sticks. They tend to measure it as a whole, not by individual campaigns and channels. But ROI for some of the big spenders is measured in ways other than $$. Ego, outdoing competitors, building and shaping perceptions, etc….

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    I feel quite well also. I hope Andrew does too.

  • 6 Ahmad Khawaja

    I’ve dealt with the ego issue as well. My boss refused to cut the radio advertising even though the ROI was not cutting it. Funny how the enjoyment he received from hearing his ad on the radio was worth the opportunity cost, instead of spending elsewhere.

  • 7 Stephen

    Broadcast in my experience has been expensive. The ROI I got from it didn’t compare to local print, outdoor and internet. I only dabbled into for a little while with my business, but found it wasn’t giving me the correct communication method needed for my target.

    I do think broadcast is relevant but media has changed and the diversity you can achieve through internet is a force not to be missed.

  • 8 Chris Rogers

    Ahmad,

    That isn’t why I didn’t want to cut the radio advertising – some things you may not understand. For example, there is an indirect ROI with getting our brand name out there even if the customer does not convert directly from hearing the ad. That’s just one example. Oh yes, one more thing… YOU’RE FIRED!!!

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