Small and medium-sized businesses will continue to shift their marketing budgets to digital advertising, performance-based platforms and customer retention business solutions over the next five years, according to a new U.S. SMB Spending Forecast by BIA/Kelsey, Chantilly, Virginia.
This trend creates an increasingly large market opportunity for businesses serving SMBs and developing SMB tools.
The reports says that by 2015, SMBs will allocate 30% of their marketing budgets to traditional advertising (down from 52% in 2010), with the remaining 70% going to online/digital (mobile, social, online directories, online display, and 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,” says 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 U.S. 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%;
- SMB spending on traditional advertising will be essentially flat during the forecast period, experiencing a 0.6% 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% 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% 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% 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,” says 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.”
BIA/Kelsey will present its new U.S. SMB Spending Forecast to attendees of its upcoming conference, DMS ’11: The Summit for Small-Business Advertising Solutions, which takes place Sept. 20-22 in Denver. DMS ’11 is focused on how marketing services and solution providers can increase their penetration and profitability with SMBs.
The DMS ’11 program 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.