Surveys: SMB Doom and Gloom Aplenty

The Kelsey Group released data a couple months ago that suggested SMB ad spending was holding steady amid the economic downturn. Opus Research/Allbusiness found something basically similar. But in the last two days, two surveys have shown that the mood of SMBs is not as cheery as it was. 

The first is from American Express yesterday:

Economic challenges coupled with rising energy costs appear to have caused a shift in entrepreneurs’ outlook on near-term business prospects and priorities. Compared to last fall optimism is down significantly (48% vs. 64%), but has remained steady compared to six months ago (45%). Cash flow concerns have risen year over year, capital investment plans are at their lowest in the history of the Monitor and the number of business owners offering healthcare benefits to employees is also lower.

The second, released this morning is from MerchantCircle:

Only 20.1% of merchants surveyed around the nation believe the U.S. Government’s proposed $700 billion bailout of the financial industry will help local business owners according to new survey results set to be released next Tuesday. The study was conducted from September 25 to October 1 by MerchantCircle, the largest social network of local business owners in the nation. The survey results came from over 4,200 responders in all 50 states.

As one might expect, the mood has turned darker and more anxious among SMBs. We may right now be at the height of the recession, but it could get worse in the early months of 2009. I was asked yesterday by AdAge whether the economy would directly impact SMB ad spending. The short answer is: yes. The longer answer is: it depends. 

For example, many annual print YP campaign commitments have already been made. Canvasses going on right now may find more resistance because of the economy. Yet it’s also true that SMBs (as well as larger advertisers) don’t necessarily behave rationally. (This is not to suggest that print YP advertising isn’t “rational.” Rather it’s more expensive in major metros than it used to be because of decreased print usage.) Other the other end of the spectrum, large advertisers are still pouring huge sums of money into conventional TV despite evidence that its impact and effectiveness are increasingly muted.

Rational behavior might suggest that more ad dollars would shift online because audiences are there and the spend is “more measurable.” It’s also cheaper in most cases than traditional media and doesn’t require a contractual commitment. But online is also much more complex than traditional media advertising. And at times of stress or crisis, intertia also plays a big role. Doing what’s familiar may trump experimentation and risk taking.

One Response to “Surveys: SMB Doom and Gloom Aplenty”

  1. More SMB Attitudes Data from Amex « Screenwerk Says:

    […] SMB Attitudes Data from Amex Recently American Express conducted a study that showed the economic crisis taking its toll on small business owners and their outlook. The […]

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