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9

September

2011

70 Percent of SMB Marketing Budgets Will be Dedicated to Online Advertising by 2015 :

According to BIA/Kelsey, an advisory company dedicated to growing businesses, the amount small-businesses will spend on digital advertising, performance and online retention solutions will grow to 70% of their marketing budgets by 2015. This is a marked increase from the 48% spent on digital/online media and social marketing in 2010. In U.S. dollars, 70% of the SMB marketing budget represents $40.2 billion.

The areas of digital services expecting to benefit from increased spending include, but are not limited to: 1) Online Media – mobile, social, online directories and online display, 2) Performance-based Commerce – pay-per-click, deals and coupons, and 3) Customer Retention Services – email, reputation management, websites, social marketing and calendar/appointment-setting.

Traditional advertising (newspaper ads, billboards, phone book placement, etc.) will take the biggest hit. Given the compound annual growth rate, sales for traditional advertising will stay fairly stagnant in terms of dollars – $11.8 billion in 2010 rising to $12.1 billion in 2015 – but this represents a decrease in the percentage of total dollars allocated (52 percent in 2010 down to 30 percent in 2015).

The substantive change in the SMB advertising landscape is already reflective in the services being offered by media-related upstart companies, and more traditional media-placement companies are beginning to come around to embrace the social/digital age. The popularity of daily deal advertising, digital ads and social search offer greater flexibility and interactivity for consumers than do traditional media placements. As companies are able to more quickly adapt to changing customer bases or advertising trends, the digital sector of advertising is expected to continue growing.

BIA/Kelsey’s spending forecast was derived from the firm’s U.S. Local Media Annual Forecast and its Local Commerce Monitor Study, which tracks and monitors the marketing and advertising spending habits of small businesses.