Dive summary:
- Small businesses have always spent less on advertising because of fewer resources, but now with increasing numbers of low-to-no-cost digital options, many small businesses are choosing to skip advertising all together.
- Promotion spending has exceeded advertising every year since the recession started in 2007, which may lead some to gather that the ad spend is down because of the recession, but the IRS data compiled by Pivotal Research Group shows the amount spent per small business on advertising began declining in 2005—well before the recession hit.
- The popularity of Groupon, which posted a 42% revenue growth in the first quarter, supports the small business trend towards promotion over advertising; according to digital-marketing consultant Surya Yalamanchili, who worked as a consultant on small business with Groupon last year, small businesses would have to spend two or three times the amount they spend with Groupon on newspaper or digital advertising to generate the same amount of traffic.
From the article:
"Despite plenty of small businesses having tried digital and social media, there's still room for growth. A survey last year by the National Federation of Independent Businesses found 32% of its respondents have used Facebook, 11% Twitter and 7% digital daily deals. But firms headed by younger owners were far more likely to have tried digital media. 'Eventually, the economy churns through that legacy-advertiser base,' Mr. Weiser said."
