Small Businesses Advertise with Media Mix, Report Finds

A BIA/Kelsey report of higher-spending midmarket companies stracks SMBs spending $25,000 or more annually on media advertising and promotion.

Higher-spending small and midsize business advertisers use 6.5 different media on average in their promotional mix, compared with 3.1 different media used by the broader SMB advertiser population, according to findings from the first wave of research firm BIA/Kelsey's LCM: SMB Plus Spenders study. The survey indicated higher-spending midmarket companies are online and use a variety of online media advertising channels: A full 90 percent of SMB Plus Spenders have a Website, versus 62 percent of core LCM (Local Commerce Monitor) SMBs.

The study found these SMBs use more types of online media, and spend more for online advertising: In the past 12 months, Plus Spenders spent 26 percent of their total ad budget on online media, versus 21.8 percent for core LCM SMBs, a difference of 4.2 points. They also spend an appreciable amount of their total budget on broadcast media, the report found: 16.1 percent of their budget is allocated to broadcast media compared with 1.3 percent for all SMBs.

Midmarket companies with a larger advertising budget also appear to have a strong focus on media performance in making media buying decisions: 40 percent rated "demonstration of ROI" as the first or second most important service that a vendor of online advertising can provide. "We launched this survey in response to the numerous inquiries from key players in the local, social and geo media space, who are seeking to better understand the behaviors and needs of higher-spending SMBs," explained BIA/Kelsey president Neal Polachek.

The survey measures where SMBs are spending their advertising and promotional budgets and how their media usage and spending habits are evolving. Local Commerce Monitor draws its sample of business respondents from a mix of nationally scoped MSAs, which include first- and second-tier markets. The first wave of the LCM: SMB Plus Spenders survey was conducted in May 2010 with a sample size of 152. To participate in the LCM: SMB Plus Spenders survey, SMBs had to be spending at least $25,000 annually on media advertising and promotion, according to information from BIA/Kelsey.

"SMB Plus Spenders are more performance-oriented in making their media purchase decisions and do a considerable amount of lead tracking," said BIA/Kelsey research director Steve Marshall. "This group of SMBs, with its digital media savvy and use of more media categories, represents the sweet spot for many companies developing and delivering local advertising solutions."

The survey is an extension of BIA/Kelsey's ongoing Local Commerce Monitor study conducted annually with research partner ConStat. The LCM: SMB Plus Spenders survey addresses a higher spending bracket of SMBs - those spending at least $25,000 annually on media advertising and promotion. The report concluded this is a "considerably higher" spending level than the core LCM population, which spends on average $2,000 to $3,000 annually on advertising.