Small businesses indifferent to web adverts

Posted by Nermin Hadjarbegovic

Small businesses don’t appear to be too interested in cheap web ads offered by Google, Yahoo, Facebook and other outfits. Although the ads are very cheap indeed, small businesses in the US are simply not going for them.

The Boston Consulting Group recently worked out that small businesses spend a mere 3 percent of their tiny ad budgets online.

BCG's survey covered 550 outfits and found that only Groupon and similar daily deal companies are bucking the trend.

In contrast, bigger outfits spend up to 15 percent of their ad budgets online, hence they dominate the online ad space. Small businesses are simply not keeping up and they prefer to spend their ad money on traditional marketing vehicles, like coupons and Sunday circulars.

“Most small businesses operate the old-fashioned way, with little recognition of the internet as a channel or a source of leads,” said Sebastian DiGrande, senior BCG partner and co-author of the article. “Many small-business owners are not even aware that they have an online profile that they could be actively managing on many popular sites.”

DiGrande also pointed out that few small business owners were even aware of the perks of online advertising, such as low prices and free availability of certain services. Other co-authors said they were surprised by the lack of interest, especially in light of the social media boom, which gave everyone a voice on the cheap. The report found that small businesses continue to prefer very traditional ad channels, which might put them at a disadvantage in the long run.

The authors also found that providers or local advertising and marketing services need to learn a few lessons if they want to attract more small businesses. They need to tailor their offers and pricing to better suit their needs and they have to show small business owners some tangible benefits of online advertising.

''Companies that can redirect the billions of dollars of small-business-advertising spending toward digital marketing will unlock enormous value,'' the report concludes. “The opportunity benefits everyone: successful campaigns will simultaneously fuel the growth of small businesses and media and marketing companies - if both players can learn to leverage local advertising.''