It sounds a little nuts when you say it out loud at a time when Adwords and Facebook Ads still dominate digital advertising, but it’s true, and here’s why:
Business owners are more confused than ever about their marketing.
We live in the age of analytics and big data, but business owners are STILL victim to the confusion that a frustrated John Wanamaker articulated in the 1920s:
“Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.”
This is exactly how today’s SMBs feel about Adwords and Facebook Ads right now
And guess what? This is a good thing for agencies, media companies, and entrepreneurs who can step in and help.
Now, let’s investigate WHY it’s a good thing.
*Note: The insights from this post are based on Gordon Borrell’s 2018 VendastaCon presentation: 'Navigating the New Marketing Landscape'. Watch his entire talk here.
Table of Contents
As I mentioned above, John Wanamaker’s famous quote “Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.” is still true today!
The marketing industry is in constant flux, and even the biggest wins in marketing have a life-cycle.
A couple perfect examples are what happened with Google keywords by mid to late 2000's, and what is now happening with Facebook ads. People rushed to adopt Adwords and Facebook advertising, but now signs are showing a slowdown for both.
Peter Dulay of Conversion Giant notes,
So what are they turning to? Let’s follow the money...
What’s Driving Growth in SMB Marketing Expenditures?
To understand where the opportunities in digital are, we need to take a look at trends in SMB marketing expenditures.
Borrell Associates runs the largest survey of local advertisers in North America, which means they know what advertisers are doing, predicting, and how they’re acting on predictions.
Here’s a broad-strokes look at what the data tells us about the marketing landscape in 2018:
- Advertising is forecast to rise 5.3% overall, but the tide isn't rising for all media.
- Traditional media (non-digital), especially print and broadcast, is projected to decline by 2.2% while digital media should increase 12.7%, or 126.8 million dollars.
So, there’s plenty of growth in digital...but surprise:
It’s NOT coming from advertising:
This chart demonstrates the difference in SMB expenditures year to year. You can see that the blue line (local advertising) is projected to remain relatively flat, while the orange line (local promotions/marketing) is projected to grow significantly through 2021.
So what’s happening here?
Now that business owners are not seeing the results they once did in traditional and digital advertising, they’re looking to spend their marketing budgets elsewhere for the foreseeable future.
Gordon Borrell says this data shows that,
Where SMBs Are Investing Their Marketing Budget
Business owners are investing in marketing services.
And they’re investing a LOT of money—even tiny local businesses are laying down thousands annually for key elements of the local marketing stack.
Let’s take a look at a few key solutions that SMBs are focusing on...
1. Email Outsourcing
Email outsourcing is a big chunk of SMB spending.
For all local advertisers in an average year, about $3,300 a year was spent on email outsourcing. But you can see that some key verticals spend quite a bit more on email marketing than others.
Email continues to be a great platform for local businesses to reach their audience—with promotions, contests, newsletters, and more. In fact, email marketing averages an ROI of $38 on every $1 spent, which makes it the most powerful marketing communications tool when it comes to customer generation.
Look at how much these local businesses are spending on email marketing.
There’s a huge opportunity for you to get them to invest in YOUR email solutions rather than an email marketing provider, which 56% of companies currently use.
2. Website Outsourcing
Website design and upkeep is another major expenditure for local SMBs.
They’re spending over $18,000 a year on it, on average. That’s SO much for these SMBs!
This is another big opportunity for local marketers to jump in and help with the immediate need and beyond, according to Borrell:
3. Social Media Outsourcing
Social media outsourcing has experienced a surge in expenditures in recent years. Even tiny businesses with 10 or less employees spend $10,154 on social media.
This is another area where it really pays to understand what SMBs in specific verticals need. Case in point, realtor agents spend half as much on advertising as the typical advertiser but nearly 2x the average on managing social media.
Plus, a big chunk of SMBs (32%) invest in social media only. Not only is that 32% of small business clients that you're currently missing out on if you don't offer social media services, it’s a group of businesses you can UPSELL with other products!
Why You Need to Offer a Mix of Marketing Solutions
As we’ve seen, SMBs are spending more money than ever on digital marketing services.
However, this doesn’t mean they’re buying isolated digital solutions, and it doesn’t mean they’re totally abandoning traditional media like T.V., radio, and newspaper ads.
They’re actually buying a mixture of everything.
Gordon Borrell found that a large percentage of SMBs are investing in a mix of solutions:
Perhaps even more revealing, only 3% of SMBs used digital only, and only 22% used traditional only. The takeaway from this is pretty clear: If you want to be your client’s go-to local marketing expert, you need to offer a mixture of marketing services.
So all you marketing agencies out there, take note: Competition is heating up! You’re not the only ones out there noticing these trends, according to Borrell:
Why SMBs Need YOUR Help De-Muddling Their Marketing
Business owners have a lot of marketing tools at their fingertips.
Social channels like Facebook, Twitter, Instagram, and Snapchat are free widely used. Boosting Facebook posts is probably TOO easy, and anyone with a credit card can launch a search campaign on AdWords. Almost everyone can take their own photos or videos with their smartphone. Even a new website is a few clicks away with the rise of website builders.
However, just because digital is so accessible to the masses doesn’t mean that the people running these SMBs understand how digital marketing works.
To put it another way, just because you CAN DIY doesn’t mean you SHOULD DIY.
To drive this thought home, Borrell found that 72% of the businesses surveyed are novices. They don’t really have marketing expertise, they’re making marketing decisions on their own (or with their wife, son, or relative), and they need your help!
In fact, marketing actually takes time away from their core competencies, notes Borrell:
It’s a HUGE time suck!
Knowing this about your SMB clients and prospects will help you understand their needs, determine how to best communicate with them, and how to pitch your services.
This is also why it’s a great time to be you:
How to Sell Based on SMB Needs
Since we've followed the money trail and see what SMBs need, now's the time to make your agency the solution provider. Here's how to do it.
Your clients want results. That’s a given.
But there’s more to your relationship than that.
Businesses need a partner with a specific set of skills and values. Here’s what they’re saying they need from you (quotes from Borrell data):
Cut the Crap:
Speaking of trust...
Here's Gordon Borrel on how to earn an SMB's trust:
SMBs have options, they have tools, they have data, but they’re still confused.
They don’t trust advertising to deliver healthy ROI anymore and they’re looking for better options.
This sets the stage for YOU to enter their lives at this crucial juncture.
If you’re an agency, media company or entrepreneur who has the expertise to step in, make sense of it all, and help these confused SMBs, now’s a great time to do so.
It’s actually a REALLY good time for you to be in business.
To learn how we can help you become the trusted local expert and offer the digital solutions your SMB clients need, schedule a demo today!
You can also view Gordon Borrell's full presentation here: