As any small business owner knows, the failure rate for small businesses is staggeringly high. Restaurants, in fact, are famous for almost always failing within a few years. The difficulties are well known – limited resources, failure to earn repeat business, lack of reliable staff, lack of access to credit, etc. But small businesses also have several advantages over larger enterprises that they can use to get their foot in the door of a new market. Small businesses are nimble, and can take advantage of new trends more easily and quickly than large enterprises can.
So why is it that small businesses, despite their increasing adoption of mobile strategies, are still lagging behind big enterprises when it comes to using the most cost-effective promotional platforms available? Why are small businesses staying loyal to costly forms of advertising like newspaper circulars and direct mail when digital ads are providing amazing returns due to far lower costs?
Our guess is that familiarity and comfort with print ads is still high, while mobile channels remain somewhat obscure to a segment of small business owners. But this loyalty comes at a hefty price. Print ads are expensive, and despite this high cost, don’t deliver great returns. In fact, effectiveness isdeclining rapidly. Large corporations are well aware of these lowered returns, and have begun to shift marketing dollars to mobile platforms. Unfortunately, small businesses, even with their advantageous flexibility, have not been as quick to follow suit.
The difference between is large: for small businesses, only 3% of ad dollars flow online, while large businesses allocate roughly 16% for the segment. The strange part is that mobile promotions are the most affordable advertising channel available – a natural fit for small businesses. More specifically, mobile ad rates are the second lowest among all advertising mediums – cheaper than broadcast, print, and digital channels.
With direct mail returns hovering just above zero at 1-2%, it becomes difficult to see why such a costly advertising channel should remain popular among small businesses that need to make every marketing dollar count. Therefore, due to the higher returns delivered by mobile ads, and because of the declining effectiveness of expensive print advertising, small businesses need mobile now more than ever. Ignoring the trend will only lead to compounding the advantages of competitors and large corporations, while small businesses that move with their audiences will enjoy solid returns on their advertising expenses.