SMBs Are Driving Internet Ad Revenues to Historic Levels

From consuming content, to finding information, consumers now spend most of their media time engaged with digital media. The influence the Internet has had on consumer buying decisions seems to have grown faster than the ad industry’s investment in it. But that appears to be changing.

According to the IAB and PwC, U.S. Internet ad revenues reached a record-breaking $13.3 billion in Q1 2015 which represented a 16% increase over Q1 2014.  At this rate, Internet ad spending is expected to overtake TV by 2019.

A Borrell study published earlier this year estimated that the “local” space, often synonymous with SMBs, would account for roughly $46 billion of the total online ad spend in 2015. PwC data estimates that a total of $55.4 billion will be spent on Internet ads in 2015, which leads to the conclusion that big brands will account for about $10 billion or 20% of the total.

When there are around 25 million SMBs in the US (Census data) it stands to reason that SMBs are driving this growth in Internet ad spend. Even if just a quarter of these businesses buy internet ads with considerably smaller ad budgets, the Borrell study suggests that they are still out-spending the roughly 18,000 businesses with 500 employees or more.

Similarly, a more recent Borrell survey explored SMB perceptions which suggested this trend of digital ad spend growth isn’t slowing down. While digital marketing services still take the cake in SMB spending, overall investment in online/digital as a media type will continue to grow and we can expect part of that growth will specifically be allocated to Internet ads.

Budget Changes

The distinction between advertising and marketing is a relevant one from an industry perspective, but SMB advertisers tend to see it all as ways of “getting the word out.” While the question in the chart above does say, “…your total advertising budget…” the figures may have been impacted by respondents’ interpretation of the word “advertising.”

Regardless, the takeaway here is that online/digital has the largest anticipated increase in budget of all media. As an example, the Borrell study showed that of all the ad spend in Myrtle Beach, SC, online media accounted for the lion’s share at 31% or $59 million.

We appear to be in a stage of rapid growth of Internet advertising. Whether because of better digital know-how or an improved value perception, SMBs are pushing online ad revenues to historic figures. For this reason, now might be the time to once again explore online ad opportunities with SMB clients that rejected the idea in the past.

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