Small-business owners favor referrals over mass marketing

While the vast majority of small-business owners are concerned about the current economy, this isn't putting over a quarter of them off spending on more advertising in the coming year, according to a report from Ad-ology Research.

by Helen Leggatt

Ninety-seven percent of small business owners are going in to the New Year with some concerns over how the economy will impact sales, but that isn't going to stop 26% of them spending more on advertising, in particular online advertising.

Ad-ology's survey of 863 owners of U.S. businesses with less than 100 employees in October 2008, found that 67% intend to spend the same, or more, on online advertising this year. Yellow Pages (54%), newspapers (51%) and direct mail (51%) are also among the channels small-business owners are looking to to deliver results.

What is apparent from the research is that small-business owners are beginning to realize that mass marketing may not be the most effective way forward. Over three-quarters (78%) believe referrals to be their best acquisition route and just 37% believe getting a marketing message to as many consumers as possible is best.

Other key findings from the survey:

• "Knows my company/line of business" is the top attribute small business owners look for in a media advertising sales rep. "Delivers what they promise" is the second most desirable attribute.

• 52% of small business owners surveyed agree with the statement "you can gain market share by marketing while your competitors are cutting back".

• 74% believe their company "must be one of the first 2-3 that come to a customer's mind" when they need what the small business owner is selling.

• More than half of respondents plan to spend the same or more time and money on their Web sites and email marketing in 2009.

• The majority of small businesses are not using other emerging media: 77% do not use online video, 83% do not podcast, and 82% do not use mobile advertising.

"Small business owners rely on advertising sales reps for guidance and are clearly looking for consultative partners in the advertising process," said C. Lee Smith, president and CEO of Ad-ology Research. "They are more likely to purchase advertising from those that understand their business."

Tags: Ad-ology Research, direct mail, economy, mass marketing, online advertising, referrals, small businesses, small-business owners, Yellow Pages