April 11, 2006

Small and medium-sized businesses that have been in operation for 10 years or less spend more on marketing (traditional and new media) than SMBs in business for more than 10 years, according to The Kelsey Group.

During a presentation at the recent Yellow Pages Association Annual Conference in Orlando, Florida, Kelsey Group analysts offered findings and analysis from the firm’s Local Commerce MonitorSM, an ongoing study of media usage by SMB advertisers, conducted with research partner ConStat.

Of the SMBs surveyed, those in business less than 10 years allocate an average of $6,246 of their annual operating budgets to advertising and promotion, while those in operation 10 to 20 years spend $4,198.

“What the data confirms is that SMBs that are trying to grow their businesses recognize the need to spend more on advertising and promotion than established SMBs,” said Neal Polachek, senior vice president, research and consulting, The Kelsey Group. “For a long time, the more established SMBs likely received a disproportionate share of attention from media marketers. The data here suggests that younger businesses should be given an added dose of attention by all local advertising providers.”

The survey’s findings also indicate that the under-10 SMBs are using online media much more aggressively than older businesses. However, both established and new SMBs have yet to embrace local paid search advertising. Only 6 percent of newer SMBs and 4 percent of older ones currently use local search in their marketing mix, the survey found.

When asked about plans for future spending, under-10 SMBs indicated they are more inclined to increase their budget allocations for advertising and promotion in the next one to two years compared with SMBs over 10:

SMBs in business over 10 years: 12 percent plan to increase spending

SMBs in business less than 10 years: 17 percent plan to increase spending

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