The Addressable SMB Market May Only Be 20% Penetrated

Over the past week I’ve been on the receiving end of a number of questions about the size of the SMB market, both in the US and globally. I’m currently at the SIINDA conference in London, where this topic has also come up a few times, with wildly different statistics being exposed.

The US Small Business Administration says the following about small businesses numbers:

  • 28.8 million SMBs
  • 56.8 million employees of SMBs (though most have no employees or very few)
  • SMBs employ 48% of US workers
  • SMBs represent 99.7% of all US businesses

There are about 45 million SMB Facebook Pages globally according to the company’s most recently released data.

The Yext S-1 says the following about the market opportunity (including multi-location brands):

There are currently over 100 million potential business locations and points of interest in the world as identified by Google Maps, and we believe this is the potential market that could benefit from some or all of the features of our platform.

A crude estimate of the number of SMBs working with local media publishers and digital agencies to manage their marketing is less than 3 million in the US (my speculation/estimate). If we assume that the true addressable market in the US is something closer to between 10 – 15 million (vs. 29 million) then only 20% of the market is penetrated by agencies/media sellers.

If the addressable market is closer to the 29 million then the penetration number is much smaller — and the remaining opportunity is correspondingly larger.

SMBs working with agencies

LSA small business survey data (2016) found that 67% of SMBs were NOT working with an outside third party agency, publisher or consultant to help with their marketing. Other surveys of SMBs suggest that more than 70% are doing their own online marketing.

If these numbers are correct, then there remains a massive market opportunity for companies delivering digital marketing services. However, local media publishers will need to expand beyond their traditional media and sales footprint to realize it.

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