Small Businesses Increase Web Spending, Shift Ad Spending

The smallest U.S. businesses have average annual sales of $212,000 and spend just $5,671 per year on advertising, typically in the yellow pages or on direct mail ads or on coupons, say analysts at Borrell Associates. But where small businesses used to spend four percent of their budgets online three years ago, they now are investing 11 percent of their advertising that way.

And there's a shift of thinking occurring as well. SMB executives are blurring the lines between what’s advertising and what’s not. They consider whatever they spend on their own Web sites to be “advertising,” though in actuality that spending is a technology, design and telecommunications expense, Borrell Associates notes.

When marketing professionals were asked in which media they intended to spend more money this year, two thirds of them said “my own Web site.”

SMBs are less receptive to buying banner ads (now accounting for 54 percent of their online spending, but declining) in favor of search-engine advertising, online directory listings, and streaming video. And they are diverting money toward something that feels to them like advertising, but in reality is technology-supported marketing: Web site design, search engine optimization and customer databases, Borrell Associates says.