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Larger SMB Spending Is Growing, While Smaller SMB Spending Is Dropping

By | 11.24.15

Larger SMB Spending Is Growing, While Smaller SMB Spending Is Dropping

So-called “Core” small- and medium-sized businesses (SMBs) average annual advertising spending has been dropping over the past few years, according to BIA/Kelsey. They indicate that the drop involves both the “increased use of digital media and increased use of social media.” Concurrently, the average number of media used by this group has risen from 5.0 in Wave 18 (third quarter 2014) to 5.9 in Wave 19 (third quarter 2015).

Although Core SMBs’ use of digital and social media is on the rise, it is the cost of these media channels that is leading to lower advertising spending.

BIA/Kelsey reports in its Local Commerce Monitor (LCM) survey, they reviewed small businesses in two distinct groups:

  • Core Spenders: Annual advertising spend is less than $25,000 and the firm staffs an average of 5.5 employees.
  • Plus Spenders: Annual advertising spend is greater than $25,000 and the firm staffs an average of 20.9 employees.

Core SMB annual advertising spend over five years, according to BIA Kelsey:

  • Wave 16: $2,948
  • Wave 17: $2,565
  • Wave 18: $2,506
  • Wave 19: $2,471

Plus Spender SMBs annual advertising spend over 5 years, according to BIA Kelsey:

  • Wave 16: $75,037
  • Wave 17: $73,146
  • Wave 18: $78,776
  • Wave 19: $75,169

Plus Spender SMBs’ average annual advertising spend has remained more consistent. These larger SMBs have sufficiently large advertising budgets to enable the use of managed services, “professional help and powerful tools,” resulting in a high return on investment (ROI) for their actions.

The higher spending SMBs are also intensely using lower-priced digital media and are pushing those savings into additional media advertising. For both Core SMBs and Plus Spender SMBs, the average number of media used is on the rise. Plus Spender SMBs has risen from 10.9 in Wave 18 to 12.9 in Wave 19, according to BIA/Kelsey.

Source:

Ackley, Suzanne. BIA Kelsey; Small SMBs Spend Eroding While Big SMBs Grow; November 17, 2015.

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