Small businesses: We’re all in for digital advertising
The reasons may not be what you think. Yes, users are going there.
September 7, 2016
Everyone knows ad dollars are moving from traditional to digital media. But not everyone understands why, especially when it comes to small businesses (SMBs). The perception is advertisers are moving to follow the eyeballs—everyone’s online all the time now, right? But for SMBs, the answer is more nuanced. Cost is a bigger factor than it is for larger businesses, though perhaps not in the way you’d think. SMBs move money not because digital is so cheap but because they perceive traditional media as being so expensive. And they feel they don’t have the time or money to spend on branding, which is important for big businesses. SMBs want customers now, not 10 months from now. Gordon Borrell, chief executive officer of Borrell Associates, talks with Media Life about the company’s latest SMB advertising report, which uncovers this trend and more, such as why Facebook advertising has doubled, why newspapers are taking the biggest hit, and why some SMBs are actually increasing ad budgets.
What’s the most surprising thing you learned from this report?
The swift migration to Facebook is stunning. Seeing twice as many advertisers buying Facebook ads is remarkable.
What’s the most important thing media buyers and planners can take from it?
Local advertisers clearly want lower-price advertising that reaches a target audience and has immediate results. Anyone in the media buying/planning business needs to know that advertisers expect results, almost immediately.
At the local level, they aren’t patient enough to appreciate “branding.” They know advertising can work immediately. And they know social media meets their target and should have measurable results.
Do you think SMBs’ advertising patterns correlate to big businesses, or is that a poor comparison to draw? Why or why not?
Bigger businesses understand the value of branding. It molds minds and doesn’t have an immediate effect on sales. SMBs can’t afford to wait, mostly because they can’t afford to misfire on advertising. So whatever they do this month needs to affect sales next month, or it’s cut.
You found that three-quarters said they are funding digital advertising by cutting traditional. Is this a change from what you’ve found in the past?
Yes and no.
Advertisers don’t typically spend more year to year, so they usually cut something if they want to increase something else. What’s remarkable is that more now (about one-fourth of local advertisers) are increasing overall budgets to fund digital, while simultaneously trimming other budgets. It speaks to the phenomenal attraction to digital, and the willingness of SMBs to find every means possible to fund digital activities.
Why are newspapers suffering the most from these cuts?
Newspapers are seen as too expensive. It’s as simple as that.
I think newspapers are still a very powerful, influential medium. Print has an impact that digital can’t quite match. But you’ll have to take it up with advertisers, who are voting every single quarter by scaling back their newspaper buys.
I really think it has everything to do with pricing.
What do the media that are suffering the biggest cuts have in common, why are they being targeted?
Cost. It’s the No. 1 issue on local advertisers’ minds.
The delivery cost associated with print–yellow pages, newspapers and magazines–drives the cost up, and the scarcity of inventory on broadcast outlets also drives up the cost.
You don’t have any of that with digital media. What’s happening today is the supreme targetability of digital media, combined with the low cost and immediate “results,” is siphoning dollars from print and broadcast.
Among the causes noted for switching to more digital, only 9 percent cited the advice of media sales reps. What does that tell you?
It’s pretty simple. A traditional media rep isn’t going to advise a client to put more into digital advertising at the expense of the core product they’re trying to sell. They might try to get them to buy more in total, but they’re certainly not going to ask them to switch dollars.
Why has Facebook seen such big interest among SMBs, with SMBs who say they advertised there doubling in the past year?
Again, it’s cost. You can advertise on Facebook for $20 and see immediate results. They’ve cracked the code. Facebook is tapping not only traditional advertisers but the infamous “long tail” who don’t advertise much.
You note that the number of times per week that advertisers receive calls from sales reps has gone up just in the past year. Why is that? Which media is most aggressive? And does aggressiveness help land sales?
Digital media reps are the most aggressive.
They’re sending incessant emails about getting your website to the top of Google’s search listings.
But you’ve also got traditional media stepping up the pace to sell packages that include digital. It’s all become quite annoying, and all pointing to the likely result that advertisers will rely on the rep who knows them the best and provides a package of advertising that drives the best results.
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