Small Business Owners See Negative Results from Cuts to Ad Budget

It’s often said that small businesses are the machines that drive the engine of the U.S. economy. So it’s good news that about half (51%) of these business owners believe their revenue streams will fully recover by the end of this year.   This is just one of the findings from FedEx’s Sign of the Times Small Business Survey. Another key survey result indicates that established business owners (in business for 5+ years) do not plan to spend  as much this year as owners of less-​established businesses.

One of the most telling statistics from the survey uncovers a truth about ad budgets. During the recession, many small business owners opted to cut their marketing/​advertising budgets.  As a result, over 31% of owners noted that these cuts had negative or extremely negative results on their revenue.

This year, up to 42% of small business owners will increase their marketing budgets. But not all of these owners are convinced about the merits of Web-​based advertising. Here’s how the opinions break out when owners are asked which form of advertising is most effective:

  • Traditional advertising such as newspapers and TV: 61%
  • Online banner ads, search engine optimization, etc.: 39%

Despite skepticism about online advertising, here’s how survey respondents plan to allocate the most resources in 2010:

  • Traditional outlets such as radio, TV or newspaper: 14%
  • Online such as banner ads or search: 32%
  • Printed materials such as direct mail: 24%
  • Split evenly between the 3 above categories: 31%

Expect to see small business owners looking for ways to grow their revenue streams this year. And despite their hesitation about online marketing, it looks as though many owners will be exploring how to best use online tactics.

[Source:  Signs of the Times Small Business Survey. FedEx.  Spring 2010. Web. 7 Jun. 2010] 
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.