Can Small Businesses Even Compete in Adland?

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By: Dwayne W. Waite Jr.

Talk about small business in America has dominated the news and political worlds for the past few years. People believed that small businesses were "under attack" and needed help to succeed. Small business, the most common business in America, is looked at as an indicator of our economic prosperity. The better the small business world does, the better off we all tend to be.

But it is getting tough for small businesses. Not because of politics, or directly because of the recession.

It's about advertising.

There are two things we are going to cover. First is the exorbitant amount of money big companies are spending on advertising, and the effect it has on the economy. Second is the perception of the cost of advertising that may cause small business owners to rule it out.

On cost: when someone thinks of advertising, no one thinks rarely thinks of the local business crafting a well-done ad. They think of the multi-million dollar advertising campaign. Adfolks dream of leading a worldwide creative strategy, and the big businesses of today are paying for both. Blogger Zach Heller wrote about this very topic. Though we could not immediately find his source, he suggests that 90% of all ad dollars are spent by 1% of companies, worldwide. The reason why we quote it, though we are unsure of its accuracy, is that we believe that it is not far-fetched. In one of our own posts, we found that 30% of all ad spending from advertising agencies worldwide originates from WPP.

Then we found a Business Insider report that looked at big advertising spenders in 2010 and 2011. For example, GM spent $4.2 billion dollars in advertising during 2010. Hewlett Packard spent $1 billion on advertising. Though notably smaller than GM, the crazy part comes when the $1 billion was only .7% of its total revenue. During that same time, Verizon spent $2.5 billion, which was 2.2% of its total revenue.

Big money indeed.

On perception: when small business owners see these kind of price tags for advertising and campaigns, there's no doubt it can be discouraging. Even more disheartening is when these same owners go to local advertising and marketing agencies and the shops want to charge the small businesses as if they have budgets as big as Verizon's. It is a struggle for both Adman and small businessman. On our side, we have fought for so long to find prices that match our creative services, and on their side, they need to find marketing and advertising help that fits their budget.

The truth is, small businesses can compete. The beautiful thing about advertising is that there is not one way to be successful, and that a huge budget does not equate to success (reference: see Miller Light). And for the advertisers, some of the best creative we can do could be for local businesses; we shouldn't price them out of their range.

If small businesses want to compete, we need to be available to help.

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About the Author

Dwayne W. Waite Jr. is partner and principal at JDW: The Charlotte Agency, a marketing and advertising shop in Charlotte, NC. He enjoys consumer behavior, economics, and football.

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