Third of small firms don’t advertise despite the benefits

marketersThe UK’s army of small firms which have embraced advertising are benefitting from its positive impact as they look to expand both at home and internationally yet a third do not spend a single penny on promoting their business due to concerns over cost and previous ad campaign failures.

That is according to a new study by Amazon Ads, which exposes a mixed bag of opinions on the joys and the pains of the adverting and marketing industry.

On the plus side, the study found that nearly 9 in 10 (86%) of smaller businesses said their current ad strategy is successful in acquiring new customers while more than three quarters (76%) said it had helped them to expand their UK business. More than half (54%) said that advertising had helped them grow their business internationally within the last 12 months.

This confidence has led more than two in five (44%) UK firms to increase their adspend on during the past year, while 35% kept their budget the same year-on-year.

The most common motivations for this increase in spend include to drive awareness of a new product or service (48%) or to improve customer awareness of their brand (51%).

The most popular channels include social media advertising (65%), followed by online search (58%) and online display (40%). Looking ahead, more than a quarter (28%) said they planned to spend on streaming TV advertising during the next 12 months.

Of the 300 firms sampled, almost just over two-thirds (71%) said they currently spend on advertising, compared to nearly a third (29%) that do not spend advertising at all.

When asked why they are not currently advertising, the most common response was that it is too expensive (42%) while a similar number (38%) said they have not seen a return on previous investments (ROI).

And, even among firms that are currently spending on advertising, challenges remain. Three in 10 (30%) said that their biggest issue with advertising is knowing where to focus their budgets to achieve their goals, while more than a quarter (26%) said they were unsure how to measure the performance of campaigns. The same number (26%) said creating compelling content was the greatest challenge their business faced.

Amazon Ads director of global SMB marketing Ludovic de Valon said: “We see many SMBs testing the impact of advertising as part of their overall growth strategy and deciding if advertising provides the right return on investment to help them meet their business goals.
“Our aim is to make advertising as simple as possible for any SMB by removing the barriers, through a low cost of entry, closed-loop measurement and the ability to surface their products to customers at scale.”

The report maintains that there is a clear belief in the power of technology to enhance the impact of advertising among UK SMBs and to help them solve existing problems, as just under half (45%) said they believe AI will improve the performance of their campaigns. As a result, almost one in five (18%) are currently training their teams on how to use AI technology for advertising purposes.

De Valon added: “AI and machine learning have created a range of new possibilities for advertisers and SMBs are already seizing this opportunity.

“These technologies are democratising the ability to advertise at scale and enabling small businesses to create compelling content that reaches relevant audiences in the right place and time.”

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