SMBs Increasing Advertising in 2019, The Manifest Research Finds
Ninety-one percent of small business owners plan to increase their spending on advertising in 2019, The Manifest, an affiliate of Clutch Research, found in its 2019 Small Business Advertising Survey.
Nearly all small businesses, defined in the report as firms with less than 500 employees, advertise (87 percent), and 67 percent plan to begin using a new advertising medium in 2019.
Annually, more than half of small businesses (57 percent) spend less than $50,000 on advertising, and 37 percent spend less than $10,000 on advertising, the survey found. Only 7 percent spend more than $1 million on ads.
"I would not go below 2 percent, but it really depends on what the business is, what its competition is, and how unique its proposition is," Tim Smith, director of communications and media planning at IPNY, an advertising agency in New York, said in the report. "If small businesses don't advertise in some way, their chances of succeeding are very limited."
While small businesses will increase spending on a variety of advertising channels, most plan to spend more on social media advertising (56 percent) and other online advertising, such as Google search, banner, and retargeted ads (41 percent), the research found. Other formats that are expected to see increases include events (21 percent), print (21 percent), TV (18 percent), and radio (15 percent).
Among the reasons cited for the growing interest in digital advertising, small business owners and managers said it's an easy way to reach consumers where they spend time.
"Digital advertising reflects the way people shop today, which is online, and offers targeting opportunities that weren't possible before," said Harry Chapin, CEO and founder of Forge Worldwide, a brand-building company in Boston, in the report.
Adding to the appeal is the fact that digital advertising allows businesses to target people based on specific demographics, increasing the likelihood that their advertising budget doesn't go to waste reaching people who are unlikely to convert.
"We've tried bus benches, billboards, print, and Yellow Pages, but nothing comes close to the ROI we are able to extract from online advertising," said Sean Pour, marketing manager of SellMax, a used car buyer based in San Diego.
A Generational Gap
And there is a generational gap when it comes to ad spending, as the research found that millennials value advertising more than older business owners.
About 61 percent of millennial SMB owners spend more than $50,000 on advertising annually, compared to 36 percent of Generation Xers and just 15 percent of baby boomers. Conversely, 52 percent of baby boomer SMB owners spend less than $10,000, compared to 40 percent for Gen-Xers and 22 percent for millennials.
The reason for this is that millennials grew up with both traditional and digital advertising, and this personal experience makes them more willing to spend more on advertising.
"It’s the world [in which millennials] have grown up, and they've seen other businesses be successful that way," Josh Ryther, senior partner at Deksia, a marketing strategy agency in Michigan, explained.
But across the board, ad spending will increase among all generations, but to different degrees. About 94 percent of millennial-owned businesses will increase spending on advertising, while 92 percent of Generation Xers, and 84 percent of baby boomers plan to do so, the research found.
Among SMBs, the old adage that you have to spend money to make money is starting to ring true. The Manifest's data supports the notion that a successful advertising strategy helps small businesses make money in the long run.
About one-third of small businesses (32 percent) say their main goal for advertising is to increase sales and revenue. Other reasons cited include converting leads to customers, standing out from the competition, increasing brand awareness and trust, and improving search engine optimization.
"The goal of advertising is to simply create brand recognition for small businesses in order to increase brand engagement and overall sales," said Les Kollegian, CEO of Jacob Tyler, a brand experience agency in California.
Overall, the survey shows that advertising is a beneficial investment for most small businesses, so look for them to continue to allocate time, money, and resources toward advertising.