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Main Street Goes Interactive
- Publication Date:March 2009
- Publisher:Borrell Associates
- Product Type: Report
Main Street Goes Interactive
As larger businesses appear tapped out, headed for bankruptcy, or just extremely reluctant to continue longstanding advertising practices, local media companies are scrambling to find new customers along Main Street. These small- and medium-sized businesses, or SMBs, in aggregate may seem like a bonanza: There are more than 14.6 million SMBs, and they tend to overspend on advertising relative to their size.
In reality, however, the SMBs in any market are less like a two-ton gorilla and more like a thousand four-pound monkeys - difficult to chase down, and almost impossible to corral The smallest U.S. businesses have average annual sales of $212,000 and spend just $5,671 per year on advertising - typically in the yellow pages or on direct mail ads or on coupons. But all that's changing with the rise of the Internet - where they are now investing 11 percent of their advertising, up from less than 4 percent three years ago.
These SMBs are blurring the lines between what's advertising and what's not. They consider whatever they spend on their own Web sites to be "advertising," though in actuality that spending is a technology, design and telecommunications expense. When marketing professionals were asked in which media they intended to spend more money this year, two thirds of them said... "my own Web site."
As their Web sites look increasingly like storefronts with shopping carts and checkout counters, SMBs are being deluged with offers to drive traffic to them by placing listings in online directories, bidding for keywords on search engines, running e-mail marketing campaigns, and buying display ads on media Web sites.
The SMBs are listening, but not quite cooperating. They are less receptive to buying banner ads (now accounting for 54 percent of their online spending, but declining) in favor of search-engine advertising, online directory listings, and streaming video. And they are diverting money toward something that feels to them like advertising, but in reality is technology-supported marketing: Web site design, search engine optimization and customer databases.
Their current rate of interactive advertising spending is no drop in the bucket. The nation's 14.6 million SMBs were responsible for more than $6.9 billion in locally generated, locally targeted interactive advertising in 2008 - more than half of the U.S. total. And while the smaller merchants spent less than $300 each on Web site support last year, we are forecasting that SMBs will triple this ""non-advertising"" marketing expenditure over the next few years. SMBs are collectively poised to plow billions of dollars into their own Web sites.
The owners of small businesses would be well advised to understand these trends as they look to the Internet to help stimulate sales from both inside and outside their market. Many Internet marketing products are oversold and under perform. Some work well. And a few work phenomenally well. Understanding the nuances of online marketing is even more important for local media companies trying to serve this smaller, lower-ticket advertising segment. This report helps identify SMBs and dissects this mass migration toward interactive media.
- CHAPTER 1 - Hunting the Elusive SMB
- Fig.1.1: U.S. Business Units by Employee Size Cohort
- Fig.1.2: Cumulative Share by Employee Size Cohort
- Fig.1.3: Media Spending Variation by Employee Size
- Fig.1.4: Ad Spending by Media Spending Stage
- Fig.1.5: Ad Spending Variation by Media Spending Stage
- Fig.1.6: Percentage of Online and Offline Ad Spending Shared by Each Media Stage
- Fig.1.7: Media Stage Profile for Building Contractors
- Fig.1.8: Media Stage Profile for General Merchandise Stores
- CHAPTER 2 - What's happening in River City
- Fig.2.1: 2008 Estimated SMB Local Interactive Ad Spending
- Fig.2.2: 2008 SMB Local Interactive Ad Spending by Media Stage
- Fig.2.3: 2008 SMB Offline and Interactive Ad Spending, Showing ""Big 3"" Shares
- CHAPTER 3 - A Walk down Interactive Main Street
- Fig.3.1: SMB Local Ad Spending - Top 25 Categories, Ranked by Online Share
- Fig.3.2: Online Media Shares of SMB Media Stage 1 and 2 Online Ad Spending
- CHAPTER 4 - More Goes Toward ""Non-Ad"" Marketing
- Fig.4.1: SMB Ad and ""Non-Ad"" Share of '08 Local Marketing Spend
- Fig.4.2: SMB Ad and ""Non-Ad"" Share of '08 Local Interactive Marketing Spend
- Fig.4.3: SMB '08 Local Interactive ""Non-Ad"" Spending - Share by Category
- CHAPTER 5 - The Future of Interactive Main Street
- Fig.5.1: Forecast SMB Local Interactive Ad Spending, Compared with
- Fig.5.2: 2009 Spending Plans for Selected Media Choices
- Fig.5.3: Selected Advertising Channels - Percent saying ""Perform Strongly for my company""
- Fig.5.4: 2008 to 2013 Change in SMB Interactive Marketing Spending
- Fig.5.5: Change in SMB Local Interactive Marketing Budget, 2008 - 2013
- CHAPTER 6 - Where the Money Goes: ""My Own Web site""
- Fig.6.1: Web site Support Spending for SMBs
- Fig.6.2: SMB Web Spending Compared to All U.S. Businesses
- Fig.6.3: Online Services Spending by Category - SMBs vs. All U.S. Business Units
- Conclusions and Recommendations
- Appendix A
- Appendix B
- Appendix C