As I travel around the web each day, I see a variety of ads. Many of them are banner ads reminding me of the effectiveness of cookie based technology. (Hey, look at that ad for Old Navy, I was just on their site this morning. What a coincidence.) Then there are the Facebook ads which I hardly notice and when I do, I find them irrelevant. Also the search results I see in Google (now that’s effective advertising) and the emails and social media updates I get from companies I follow.
That’s a lot of advertising and some of it is working because I’ve been known to click and buy things. But when I think about it, I realize that almost all of the ads I see in a day are for big companies and brand names. The last time I saw an ad for a local store it came out of a Val-Pak envelope.
Small businesses generate half of all sales in the United States but they’re barely a blip on the Internet radar. Why is that?
The Boston Consulting Group surveyed 550 small business owners and found that only 3% of their ad budget is spent online. The overwhelming majority of their money is going to coupon mailers like Val-Pak, the Sunday paper and other types of traditional marketing.
Here’s how that looks in comparison to big business:
I’m not sure that 550 small businesses is a large enough sampling but I don’t doubt the general result. You simply don’t see a lot of small business ads online. Why is that?
Partly, it has to be about habit. So many small businesses are family run, generation after generation, so they follow the same path year after year. The problem is, what worked in 1980 won’t necessarily work in 2013. In 1980, a small hair salon could reel them in with a bold listing in the Yellow Pages. To get that same amount of traffic today, that salon owner is going to have to be a little more creative.
I also think that online advertising is too confusing, leading many people to give up before they start. I’m not saying small business owners can’t handle it, but think about what’s involved in running a proper Adwords campaign or setting up Facebook advertising. The Yellow Pages had a salesman who would come over and walk you through your options (maybe they still do?). Who does that online?
For the small business owner, it’s all about ROE – Return on Effort. They already have their hands full with the day to day running of their business, so there’s little time left over for anything else. If all a person has to do is say “run it again” when the newspaper calls about their ad, that beats the hours it will take to learn about Promoted Tweets on Twitter.
Which brings me to the biggest problem of all – a lot of online options are simply too expensive for a small business. You could argue that they’ll make it back in trade, just don’t say that to the people who ended up losing money on Groupon coupons.
There are affordable, suitable online options for all kinds of small businesses but until they become as common as direct mail and newspaper advertising, small businesses are going to keep paying for physical rather than digital.
Photo Source: G-MO