Advertising For SMEs

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SMEs make up a half of all jobs in the UK and account for half of our GDP, yet the advertising undertaken by the SME sector is often DIY according to a new report

There are around 4m SMEs in the UK. They are hugely important to the health of the nation in the number of people they employ and their contribution to the economy.

Officially SMEs are companies that employ less than 250 people. Actually, 99% employ less than 50. These are therefore very small companies running businesses often on a shoestring. They are attempting to market their products and services professionally and yet they cannot afford professional help. Most of what they do is DIY marketing – two thirds of SMEs manage their advertising and promotions internally. For many, their advertising spend is 2% or less of their turnover.

B2B’s research shows that in the last two years a corporate website has become the most popular and most important promotional vehicle for SMEs, being used by around 90% of companies. It is cheaper than a company brochure and easier to keep up-to-date.

A close second are two time-honoured forms of b2b promotion – PR and direct mail – each used by about 60% of SMEs. These are important tools supporting the website, largely because SMEs feel they can undertake them personally. The management of the customer/potential customer database is crucial to a company’s promotional strategy as it defines who is being targeted and it provides the mechanism for delivering the message.

Founder of B2B International and co-author of the report, Paul Hague, believes that below the line advertising has a real place in SMEs advertising strategy but warns of a potential lack of creative brilliance from the proprietor, an inability to hit the hot buttons with the target audience.

What has fallen from importance in recent years is trade press advertising. It is an expensive means of promotion and is used by 53% of companies, only classed as the most important medium by 1 in 20 SMEs.

Exhibitions similarly have declined in importance although they remain significant for companies that have products where a physical demonstration or sight of the product helps.

Although the budgets of SMEs may be of a similar proportion to those of larger companies, they are small in absolute terms. There is not a lot you can do with a £50,000 per year budget for promotion. This is why websites, PR and direct mail are so popular and such important promotional tools.

When trying to gauge the return on advertising investment, the report found it surprising that half the smallest SMEs (those that spend less than £10,000 per year on advertising) claim to make some attempt to measure the effectiveness of their spend, compared to only one in ten larger SMEs.

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