Smaller Businesses Still Shy Away From Advertising

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Despite evidence that advertisements from smaller firms deliver better results than those from their larger counterparts, smaller organisations tend to underinvest in promoting their business through advertising, curbing their growth potential as a result.

According to the Advertising Pays 2 report from Deloitte and the Advertising Association (AA), small and medium-sized enterprises (SMEs) are the lifeblood of the UK economy, representing 99% of the nation’s companies. They also provide half of the jobs in the UK, but contribute to only 18% to the country’s total advertising spend.

Using results from a poll among 1,000 UK SMEs, the research revealed that only 30% of SMEs invest in any form of advertising. The study found that a £1 advertising investment from a small or medium sized business can have an effect on growth eight times greater than the same amount invested by a larger corporation.

Whilst SMEs do recognise the power of advertising, they often encounter a range of obstacles that prevent them from embarking on their own commercial campaigns. Among the challenges highlighted by smaller firms is a more cautious approach to advertising budgets and spending compared to larger companies. SMEs are also less likely to develop consistent campaigns as smaller firms tend to craft each advert separately, which reduces the value of the campaign in the long run.

Smaller organisations are also less likely to measure the results of their advertising efforts, especially when it requires additional resources to do so. This makes it harder for them to appreciate the real return on investment and more difficult to optimise their campaigns over time.