One of the UK’s leading small business advice organisations has welcomed a new report that reveals that only 30% of SMEs in the UK invest in advertising as a way of stimulating competition, innovation and expansion.
The report – Advertising Pays 2: How advertising can unlock UK growth potential – by Deloitte and the Advertising Association – claims although SMEs currently account for 50% jobs in the UK and 40% of UK revenues, they represent just 18% of total advertising spend.
“This Advertising Association report makes an important contribution to the debate around small business marketing,” said Marlon Wolff, CEO of small business advice hub, Ingenious Britain.
“We know that around 40% of small business owners want to make marketing a top business priority this year, making it nearly twice as important as raising funds to grow the business. However, for many, they need better guidance on which marketing disciplines are best suited to the needs of their particular business.”
Wolff agrees with the report’s finding that cash flow and the perception that advertising is too expensive are a major barrier for small businesses to invest:
“For understandable reasons, many small businesses are turning to digital and social platforms for their first forays into marketing.
“There is a perception that social media marketing and content marketing are more cost effective than more traditional marketing disciplines, like advertising and PR. However, we urge small businesses to not jump straight into marketing, but to stop, identify their specific commercial objectives and set a budget against those objectives. If they consider who their likely clients or customers will be and where they are located, they may find that a more balanced, targeted marketing strategy, involving some elements of PR and advertising alongside social platforms might produce better results.”
The Advertising Association report claimed that SMEs that invest in advertising are more likely to achieve growth. It says that every £1 spent on SME advertising has eight times the relative impact on growth as £1 spent on advertising for larger firms. Even among micro-businesses, the report says, almost two thirds (59%) of those that advertise reported a direct increase in sales.
But, concludes Wolff, the report is unlikely to reverse many small business owners’ perceptions about the costs attached to advertising: “The finding are noteworthy but, if the advertising industry is serious about embracing and encouraging small businesses, more needs to be done to show them how to make their advertising strategy more cost effective and more likely to yield a return. In that sense, this report reveals the problem, it doesn’t provide the solution.”
Nick Moutter, CEO of Admedo, the self-serve online advertising platform, said: “SMEs now have tools available to them that they previously couldn’t afford. The availability of new online advertising platforms is bridging the digital divide and leveling the playing field for SMEs to advertise and compete against big brands. “