3/11/11

Small- and medium-sized businesses plan to increase online ad budgets 29% this year

One in three businesses say they plan to increase their social media spending.

Zak Stambor , Managing Editor

Small- and medium-sized businesses, or SMBs, are increasingly looking online to attract new consumers, according to a new report from Borrell Associates Inc.

The report finds that SMBs plan to increase their online advertising budgets this year by nearly 29%, to $40.6 billion from $31.5 billion. SMBs accounted for 19.5% of total online ad spending last year. Borrell estimates that that percentage will rise this year to 23.1%.

“Smaller businesses make up half of all business revenue, more than half of all employees, and well over nine of every 10 business units in the nation,” wrote Kip Cassino, Borrell executive vice president, in the report.

And the biggest reason to pay heed to SMB spending?

“Compared with the bigger national marketers, SMBs tend to overspend on advertising,” he wrote.

In some marketing channels, SMBs’ spending will mean that they are significantly increasing their share of the overall market.

The largest increase is in targeted display ads. Last year SMBs spent $4.31 billion on targeted display ads, which was 13.7% of the market. Their spending will increase 269.4% to $15.92 billion this year which will represent 39.2% of the market.

Similarly, even though only 40% of smaller firms have mobile advertising programs up and running, 8% of those businesses say they plan to increase their spending in the space. The report did not have a spending estimate for mobile spending.

But not every advertising category will see a spending increase among SMBs. For instance, e-mail marketing is expected to dip 8% to $9.60 billion this year from $10.44 billion in 2010. Similarly, paid search spending will decrease 28.7% to $5.43 billion from $7.62 billion.

Total spending does not correlate with the areas where SMBs are focusing. Here are the percentage of SMBs using each marketing channel and the percentage of those businesses that plan to increase their spend in that area:

• E-mail marketing, 80%, 34%

Social media, 70%, 32%

• Search engine marketing, 52%, 11%

• Targeted online display ads, 51%, 9%

• Run-of-site online display ads, 48%, 6%

• Paid search, 47%, 9%

The report is based on a survey of 2,842 small- and medium-sized businesses conducted earlier this year.

Topics:

Borrell Associates, display advertising, e-mail marketing, Kip Cassino, online advertising, paid search, SEM, small businesses, SMB, social media

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