Accessible tools, low prices and in-house creative options are leading millions of small businesses to invest into digital advertising this year, competing with national brands for viewability in search and social channels. According to the IAB’s latest bi-annual advertising revenue report, small business marketing efforts are in a large part responsible for the continued growth of advertising marketplace.
On Wednesday, AListDaily sat in on a livestream presentation of the findings from the IAB’s biannual advertising revenue study, which stated that over half of the companies on 2016’s Fortune 500 list are posting declining revenues, and yet, total digital advertising revenue continues to rise.
Advertising spend in general grew by 2.8 percent in the last year, yet for companies making over $250 million per year, that number was just 1.2 percent. To account for this counter-intuitive data, the IAB-commissioned Borrell Associates found that easily accessible marketing tools on platforms like Google and Facebook drew almost seven million small businesses to buy digital ads in the last year.
“There is a large (and growing) cohort of small- and medium-sized businesses who are engaged in digital advertising,” read Borrell’s report that was made available to AListDaily. “Their budgets are, of necessity, smaller—but their numbers are significant such that there is reason to believe they are, en masse, injecting significant dollar volume into the digital advertising ecosystem.”
What’s notable about this cohort isn’t just its size (6.8 million) but its saturation: 75 percent of businesses earning less than $50 million per year spend on digital advertising, and 63 percent of those expect to increase their spending in 2018.
Part of digital advertising’s appeal to small businesses comes from its budget-friendliness. Social media is the most popular and effective form of small-business marketing but accounts for just 4 percent of their marketing budgets.
“Local advertisers are going online to do their own buying,” the report reads. “Nearly two-thirds are inexperienced at marketing, and 70 percent of those amateurs make decisions without anyone’s assistance.”
The prevalence of inexperience makes social media’s accessibility and do-it-yourself options especially attractive to small businesses. In fact, four-in-five small businesses buy advertising on self-service platforms like Facebook and Twitter. This represents a potential for marketing service providers, as self-starters who may not be willing to spend on full small business marketing campaigns will benefit from the know-how of established professionals.
“Misfires and frustrations are likely to spur a stronger demand for marketing education and a greater level of consultation from marketing-savvy ad reps,” Borrell writes.
For the current growth to continue, small businesses might be the industry’s best bet.
“Better understanding this cohort will allow for all participants in the digital advertising ecosystem to tap into the opportunity they represent, as well as increase the value of digital advertising for this important constituency,” the report declared.