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Small Business Franchises Projected To Spend 1/2 Of Their Ad Budgets Online

By Chris Crum

Thursday, February 26, 2015

Franchise small and midsize businesses plan to spend about half of their annual ad budgets on digital, according to a new report from BIA/Kelsey. It found that these businesses, on average, spent $87,165 on advertising and promotion during the 12 months ahead of the survey, which is up from $57,072 the year prior. On average, they spent 39.1% of their total ad budgets on digital media during that time.

Those same businesses said they intend to increase their digital spend to 42.9% of their total ad budget during the 12 months following the survey, which compares to 33.8% for SMBs overall.

"Franchises are one of the most distinctive SMB segments," said Steve Marshall, director of research, BIA/Kelsey. "In almost every metric, franchises act differently from the overall SMB sample. In general, franchises are taking a tighter and more disciplined approach to their customer relationships. They're using more marketing tools and platforms, loyalty programs and social media."


BIA/Kelsey says the the businesses it surveyed "demonstrate a remarkable willingness to experiment" with digital media and platforms. When it comes to social, 26.4% use Twitter, 24.6% use Twitter ads, 15.7% use Instagram, and 11.5% use Pinterest.

The Twitter numbers are interesting. Earlier this month, Twitter announced a new ad offering aimed at SMBs called "Quick Promote," which lets them promote their best performing tweets from the Tweet activity dashboard.

"Promoting a Tweet takes just a few clicks and your Tweet will automatically be targeted to users who have interests similar to your followers — the audience that is most likely to be interested in your message," said product manager Buster Benson. "Whether you're Tweeting about a new product, promotion or blog post, Promoted Tweets can help you drive measurable business results. In fact, we found that users who see a relevant Promoted Tweet from an SMB are also 32% more likely to visit that business."

If you're a small to midsize business just getting started on Instagram, Gary Jordan of recently shared some thoughts on that with us here. On the subject of Pinterest, we also spoke with with longtime Pinterest marketer Vincent Ng, and got some great tips about that.

2.6% of those franchise SMBs surveyed by BIA/Kelsey use mobile banner or display ads, while 21.6% use mobile deals, and 19.3% use text messaging. 23.6% use online deals, while 22.6% use website video, and 16.3% use video banner or display ads.

"Many franchise SMBs work with digital or advertising agencies, with 49.3 percent reporting they have worked with an agency for two years or more," the firm says. "Among those that work with an agency, 87.7 percent are either 'very satisfied' or 'extremely satisfied.' The most widely used channel by franchise SMBs for purchasing online advertising is their advertising/digital agency (36.5 percent), followed by TV stations (28.9 percent), self serve without assistance (28.2 percent), self serve with assistance (27.9 percent) and newspapers (26.9 percent)."

Take a look at this infographic they put together illustrating some of the survey's findings: (View Image)


We recently looked at another study by BrightLocal, which found that despite finding online marketing effective, half of SMBs allocate less than 30% of their marketing budgets to online channels.

"I found this figure a little perplexing when you consider the other responses SMBs gave," BrightLocal CEO Myles Anderson told us in an interview. "75% said online was effective at bringing in new customers & 3 of top 4 most effective marketing channels are 'digital'. Yet SMBs allocate a disproportionately low % of their marketing budgets online."

That study also found that there is a direct correlation between the number of employees the business has and the monthly online marketing budget. Here's a look at company size vs. planned spend on internet marketing for this year:

On Tuesday, Facebook announced that it now has over 2 million active advertisers, building on its 30 million businesses using Pages. It also launched a new Ads Manager mobile app, which will help businesses manage their budgeting from their phones (iPhone only for now, Android coming later this year).

Facebook has not been incredibly kind to small business online marketing budgets over the past year or so. What businesses were once able to get for free, they're now having to pay for more and more.

We recently talked about this with Facebook marketing expert Mari Smith, who told us, "I would recommend that low budget[s] be allocated to what are called 'dark posts.' That is, ads in the News Feed that look like a Page wall post, but don't actually appear on the Page. With very granular targeting to reach the exact target market, small businesses can do exceptionally well using Facebook. In addition, making use of custom audiences is a must. This is where a business can upload its own email database, or segments thereof, and place ads in the News Feed to that target group. Plus, using website custom audiences helps a business to retarget its website visitors with Facebook ads."

"Being able to boost (and target) posts that are already performing well is a great help to small businesses," James Whatley, the social media director at Ogilvy & Mather Advertising, London,recently told us in another interview. "The SMEs we work with tend to put aside a small 'slush fund' of media spend to work into their social channels as when these opportunities arise. Definitely worth doing."

Here's more on how SMBs can deal with Facebook's recent News Feed changes.

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About the Author:
Chris is a content coordinator and staff writer for SmallBusinessNewz and the iEntry Network. Subscribe to SmallBusinessNewz RSS Feeds.
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