A new study by BIA/Kelsey on American SMB spending suggests that small and mid-size businesses will continue the recent trend of shifting their marketing budgets to digital advertising, performance-based platforms and customer retention business solutions over the next five years. This trend creates an increasingly large market opportunity for businesses serving SMBs and developing SMB tools.
BIA/Kelsey will present its new US SMB Spending Forecast to attendees of its upcoming conference (sponsored by BIG Marketing for Small Business), DMS ’11: The Summit for Small-Business Advertising Solutions, September 20-22 in Denver, CO. DMS ’11 is focused on how marketing services and solution providers can increase their penetration and profitability with SMBs.
The study goes on to say that by 2015 SMBs will allocate 30 percent of their marketing budgets to traditional advertising (down from 52 percent in 2010), with the remaining 70 percent going to digital/online media (mobile, social, online directories, online display, digital outdoor), performance-based commerce (pay-per-click, deals, couponing) and customer retention business solutions (email, reputation and presence management, websites, social marketing, calendaring/appointment-setting).
“With the advent of daily deals to drive customer acquisition, SMBs are now increasingly focused on leveraging technological solutions to engage, grow and retain a higher percentage of their customers,” said Neal Polachek, president, BIA/Kelsey. “As this trend accelerates, these SMBs will turn to outside providers — media companies as well as pure-play technology providers — to harness simple tools, which will enable them to maximize the long-term value of each new customer they acquire.”
BIA/Kelsey’s U.S. SMB Spending Forecast is derived from the firm’s US Local Media Annual Forecast and its proprietary Local Commerce Monitor study, which tracks the advertising and marketing spending habits of SMBs. The forecast’s key findings include:
- Overall, U.S. SMB spending on media, marketing and business solutions will grow from $22.4 billion in 2010 to $40.2 billion in 2015, representing a compound annual growth rate (CAGR) of 12 percent.
- SMB spending on traditional advertising will be essentially flat during the forecast period, experiencing a 0.6 percent CAGR, from $11.8 billion in 2010 to $12.1 billion in 2015.
- SMB spending on digital/online media will grow from $5.4 billion in 2010 to $16.6 billion in 2015 (24.9 percent CAGR).
- SMBs will also increase spending on performance-based commerce and transaction platforms, from $1.7 billion in 2010 to $4.6 billion in 2015 (21.5 percent CAGR).
- Spending by SMBs on customer retention business solutions will grow from $3.5 billion in 2010 to $6.9 billion in 2015 (14.6 percent CAGR).
“Our forecast clearly indicates that the allocation of SMB advertising and marketing dollars for acquiring and retaining customers will both shift and grow over the next five years,” said Mark Fratrik, vice president, BIA/Kelsey. “Traditional media companies and new upstarts that are actively building products and solutions in the areas of digital display, SEM/SEO, email marketing, calendaring, and other acquisition and retention tools will be in a good position to take full advantage of this substantive change in the overall SMB landscape.”
The DMS ’11 program sponsored by BIG Marketing for Small Business, features more than 50 senior executives from across the small-business marketing solutions marketplace, including headliners Rita Fabi, head of market solutions, global customer marketing and communications, Facebook; Joe Walsh, president and CEO, Yellowbook; Clare Hart, CEO, Infogroup; Pat Hays, vice president of global search and display services, Microsoft; and Ben Smith, founder, MerchantCircle.
For more information about DMS ’11, including the complete agenda, list of speakers and companies attending, visit www.biakelsey.com/DMS2011.
Rajan is the founder and Editor-in-Chief of BIG Marketing for Small Business. He's an award-winning marketing strategist who is passionate about branding, digital marketing and social media. He spent nearly a decade as the marketing executive at global IT firm Peer 1 Hosting and was instrumental in their explosive growth.