Here’s Another SMB Number: $50 Billion

People are always asking me what the local market is worth: Is it $100 billion, is it $15 billion, is it some other number. I always tell people it depends on how one defines the market: what’s in and what’s not counted.

But here’s an interesting number that I’ve been using: $50 billion in US SMB ad spending. Forecaster and agency Magna Global did an analysis of IRS tax records for small business tax deductions for “advertising” and found that in 2006 the aggregate number was $50 billion (the report was published last year):

There’s no definition of “small business” in the original document (note the use of the phrase “small US corporations”). And the recession probably dropped this figure a bit.

Some number of these SMBs, especially the larger ones that may spend more on advertising, aren’t entirely focused on local. However, a majority of these folks are likely to do most of their buying and selling locally and these ad expenditures will be made accordingly. These numbers probably don’t include the millions of sole proprietors and independent local businesses — the “mom & pops” — that we think of traditionally when we discuss this category.

The universe of SMBs counted here is 6 million, interestingly, not 10 million or 20 million. That may indicate the truly small businesses aren’t represented here.

What’s interesting to me is that the dollar figures are much larger than have been floated in past discussions of SMB ad spending. This figure includes and indeed will be dominated by traditional media: print, radio, direct mail, spot TV, etc. but there’s probably some Internet in here somewhere.

What do you think of this number and what it does or doesn’t reflect?

One Response to “Here’s Another SMB Number: $50 Billion”

  1. Looking For Lessons In Hyperlocal Hoopla « LocalLab : Foire aux Infos Says:

    […] $12 billion if you count what Yellow Pages earn, and we’ve seen other recent estimates of $50 billion a year. Consumers spend a lot of money close to home, with a lot of local companies who want better and […]

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