Small Business and The Golden Age of Geomarketing

A new survey of small and medium sized business advertisers (SMBs) across the nation by Borrell includes a list of “paid” media they favor for those who still use that element of marketing.

It helps to understand that 72% of these SMBs have fewer than 50 employees and 48% have fewer than 10.  Nearly three-out-of-four are independently owned.

The paid media they favor, in this order, are digital, newspapers, local magazines, direct mail and radio.  Mobile falls sixth.

If you throw in all outdoor advertising including buses and kiosks, only 17% still bother with billboards which along roadsides are viewed as blight by 8-out-of-10 Americans.

Taking only true small businesses into account, another report shows that only 3% of small businesses now use billboards confirming they can do the math of the turn-off-to-turn-on ratio.

More than 80% of SMBs have established their own media channels in the form of a website and social media page.

Interestingly, the analysis found that 72% are now spending far more on digital services to support their websites and social media pages than they do on basic or traditional advertising.

Borrell concludes that we are at the “end of the Golden Age of Advertising” and witnessing “the dawn of the Golden Age of Geomarketing.”

According to the report, local digital marketing is responsible now for virtually all of the growth in local advertising.  Borrell defines local ad spending as dollars spent within the market to reach people within the market.

But geomarketing is now getting far more specific than the huge, sprawling, multi-county media markets devised by traditional media to optimize what they could charge advertisers by hoodwinking them into believing that consumers would commute hours away for what they could easily buy local in the truly local sense.

That’s what makes the findings of the report even more relevant.  That’s because geomarketing puts the local back in local, meaning the local business climate.

In 2013, Borrell forecast the zoom in online advertising with traditional media rather stable.  But the company’s 2015 survey reveals an even more rapid transition to online.

In reality, longitudinal research at USC’s Marshall School of Business pinpointed that this paradigm began to shift three decades ago and by 2010 , traditional advertising for businesses overall had reached a negative return on investment.

It is clear from many who analyze this rapid decline that the advent of digital and the Internet didn’t kill advertising greedy advertisers and traditional advertising mediums did.

Advertising as an element of marketing is essentially a form of “yelling” for attention.  Yelling annoys consumers even when they are viewed as entertainment or diversion as they are by 77% of viewers during the Super Bowl.

Ads during the game have a substantial turn-off ratio among viewers.  According to post game surveys, nearly 4 people were turned off by the ads during the 2015 event for every one who was influenced to actually buy something.

FYI, turned-off includes those who were bothered or viewed them as interrupting the game or making it last too long or felt the advertisers should have saved their money and passed the savings along to consumers instead.

Even if only awareness generated by the advertisers is measured, the turn-of-to-turn-on ratio barely reaches break even, hardly a metric worth shelling out $4.5 million for a 30-second spot.

Many “yup yup yup uh huh uh huh” marketers fail to grasp that traditional advertising can actually be counterproductive.  But savvy execs understand this is a fatal flaw, especially when the cost comes to $3 a viewer, double that when netting out those who were annoyed.

But then again, maybe stockholders should view these as an incredibly expensive way to stroke egos.

The shift to digital continues to have so much momentum that analysts at Borrell forecast that traditional media will soon begin to be used, if at all, more like “niche support mechanisms to a digital marketing plan.”

Full research reports and analyses are available from the Borrell website.

The Quiet Giant - Small Businesses & Local Merchants

A survey of small and medium sized businesses by Borrell Associates shows that their use of traditional advertising declined by $58 billion since 2005.

Not counting micro businesses, the “S” in SMBs which rarely ever advertise, or SMBs whose out-of-town parent handles advertising, nearly three-quarters of this segment, which is a bellwether for economic development, has switched to online as its advertising of choice, if any at all.

This downward spiral for traditional advertising began in the late 1980s, long before the Internet, due in part to greed and over-utilization to where by 2010 researchers found it to have a negative return on investment overall.

This, according to analysts at Borrell, is clearly the end of an era.  Consumers have simply tuned out.

Some channels such as outdoor advertising, even when used on buses and kiosks and when added with billboards, is now used by only 17% of SMBs including 3% of truly small businesses, making this way of reaching consumers all but obsolete.

Now appealing to less than a fifth of one percent of consumers, billboard companies have turned instead to campaign contributions and donations as a way to ensure survival, desperately hoping to lay waste to public roadsides as a result.

Meanwhile, consumers have shifted in mass to smartphones and navigation systems as less damage-prone alternatives.

The decline in advertising doesn’t mean a decline in the need for marketing overall.  Another new survey of small businesses as part of Small Business Week shows that 66% named finding new customers as their top concern, followed by 40% who are concerned about retaining existing customers.

Nearly all now rely on a website.  A survey by Adobe shows that by the end of this year, nearly 60% of all organizations will have a website with responsive design, meaning it will reconfigure depending on the device you are using to view it.

In fact, half already generate 30% or more of their digital traffic via mobile devices but, less than a third in North America have a strategic plan for using it.

When it comes to small businesses including local merchants, only 22% are using mobile marketing although nearly half allocate a quarter or more of their ad budget to it.

According to a survey by Street Fight, more than half of local merchants cite new customer acquisition as their primary objective.

Unfortunately, many local chambers of commerce, a type of business advocacy, have now turned their backs on small businesses as too needy compared to the fees they will pay.

It makes these organizations vulnerable instead to becoming hostage to interests who pay people to attend meetings and gradually less relevant and increasingly estranged from local business climates.

Small businesses are vastly under-represented in communities because they don’t have time for meetings, committees or public hearings, even though they are the key to economic vitality.

Even though 4-in-10 rely on community destination marketing organizations to fuel visitor-customers, barely 43% even have time to take vacations themselves.

Over half worked for a large or mid-sized organization before running their own business according to the study.  Nearly 70% cite “more freedom” as the reason for going small, and half sought less bureaucracy and politics.

The things you hear politicians claim they are doing on behalf of small businesses such as the economy, taxes and healthcare, are top concerns for only 25%, 22% and 18% of small business owners.

Most small businesses are not whiners as special interests would have you believe.  Unfortunately, politicians spend far too much time listening to these special interests and become hyper-reactive to complaints or so desensitized they dismiss them.

Like the vast number of voters, small businesses can often be heard by the silence they make, not the fuss.