Small and Large Local Marketers Have Remarkably Similar Spending Focus

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We’re getting ready to launch our big Street Fight Local Merchant survey and analysis, and in preparation for that, I came across an enlightening recent small business digital marketing survey. One point that caught my eye was that the digital marketing priorities for small business mirrored what Street Fight had seen in research we did around big brands and retailers that market locally. Yes, there are some key differences in these two groups, but it’s nice to see both types of buyers are planning on increasing spending for social, mobile, and email marketing.

A survey of 200 U.S. small and medium businesses conducted late last year commissioned by GetResponse revealed that 70% said they would be increasing their digital and online marketing budgets in 2017. Fewer than a third said budgets would stay the same, and only 2% said they were cutting back.

As shown in the figure above, the GetResponse survey respondents described social, mobile, and email marketing as the top growth drivers. Over one-fourth also cited video, search, and content marketing.

In recent years, Street Fight’s own small business surveys have also revealed email and social media marketing as leading channels, both in terms of spending growth and effectiveness. No surprise, local merchants are spending on what they feel is working. To date, we’ve seen less of a concentration on mobile, but we’ll see if that is gaining attention this year.

When we surveyed multi-location or national-to-local marketers last year, we saw some similar patterns. Street Fight didn’t ask about digital budget growth overall, but we did ask about six categories of digital marketing and advertising, and when averaged across the categories, 45% of the big brands and retailers said they were increasing budgets. Only 3% said they expected digital spending to decrease. 

And, as shown above, the big local marketers had a remarkably similar wish-list to that of SMBs. Their top three growth categories virtually mirrored those of the small businesses, both in rank order and in share. And it looks like even if big company budgets were slightly more static than those of small businesses, the big guys would be increasing spend across a broader range of categories. We’ll be updating our analysis of big local marketers later this year to see how these patterns are evolving.

So from a topline perspective, would-be suppliers of digital marketing technologies and services can reach both types of customer if they focus on social, mobile, and email, especially if they can help marketers create and measure multi-channel campaigns across those categories. Search and display are still important, but social and mobile remain the shiny new toys, and email the workhorse.

However, Street Fight notes that the small and large local marketers also have key differences in what problems they’re trying to solve and how they buy. Some notable examples include:

  • Attitudes toward digital marketing effectiveness. The small businesses that use digital marketing rate it more effective than traditional channels. That’s not the case with national-to-local marketers. While big brands and retailers rate email marketing highly, and appreciate social media advertising pretty well, more of them feel traditional channels like direct mail, print, and local broadcast are more effective than digital. No doubt some of that attitude is inertia, and some is a focus on using digital to drive ecommerce traffic. But they’re going to take more convincing — and ROI analysis — than the SMBs. 
  • Mobile. Heavy-duty geotargeted mobile advertising is only just emerging, even for the big companies. What mobile advertising they were doing last year was mostly purchased at headquarters, rather than at the regional, branch, or franchise level. Both they and the SMBs may be equating mobile with social, which isn’t unreasonable, since that’s where most social media is consumed these days. And many local merchants still don’t have mobile-optimized websites.
  • Data and analytics. Big brands are still primarily using location data for customer segmentation rather than for geotargeting. And their key requirement will be to tie together home-grown CRM data and analytics with advertising metrics and third-party data. Both groups will want to prove ROI, but SMBs will probably need simplified dashboards or templates, and may just as soon buy leads as tools. 
  • Pain points/challenges. The big local marketers told us that integration issues — both making different marketing technologies work together, or figuring out contradictory analytics — were their biggest challenges. Small businesses told us there was no silver bullet, i.e., they needed help across all their tactics, but that too little time was their biggest problem, rather than expertise or budget.

David Card is Street Fight’s director of research.