Only a third of SMEs currently spend on marketing.
There are many examples showing why companies shouldn't reduce their marketing and advertising budget but most of these are centered around some of the biggest or evolving brands. Recent surveys show only 32.8% of SMEs spend on marketing, with the remaining focusing on building an over-sized sales force instead.
So why do most SMEs not spend on marketing? Is it the quick results which sales provide that they prefer, or is the investment in marketing seen as not being able to generate quality campaigns with lower budget?
SMEs pick sales over marketing
We tried asking these questions to over 400 SMEs and found out that most SMEs go for sales over marketing as that provides them with immediate results and enables them to survive the next day. For most SMEs surviving the next day is the most important thing and therefor sales is an obvious.
However a huge percentage of SMEs also realise that once they reach a stage of growth or expansion it's not the sales but marketing which makes the difference. Despite that fact only 32% went ahead and invested in marketing because of the assumed large investments involved.
Why is the cost of marketing assumed to be high?
Only 7% of SMEs across the globe go ahead and employ marketing managers while the remaining percentage manages the teach themselves. Amongst all SME marketing people, only 16% attend conferences, workshops and events.
Employing resources and further investing in external events to participate is considered the biggest expense for most SMEs and one of the reasons why they refrain from marketing. Marketing consultants and freelancers are probably the best way forward for SMEs to bring in good talent while keeping their pocket spend controlled.
With growing dependence on online marketing, 54% of SMEs have gone online to spread their businesses. This is another way that has helped SMEs to reach out to audiences across boundaries, but because of the lack of understanding, professional development and expertise in online marketing, not many SMEs have been able to generate the kind of results that can be extracted.
Having said that, online marketing provides the best way of building a brand cost-effectively, and efforts to build knowledge and understanding can yield good results.
The other big challenge is the execution of marketing campaigns - design and implementation. Traditional models of design agencies, with retainer fee, have made SMEs stay away from agencies and go to freelancers. Though freelancers have been able to help SMEs across the globe, freelancers have their own limitations. After all, a print designer can't go ahead and support an SME for digital strategy and vice versa.
Design crowd-sourcing platforms have enabled SMEs access to creative talent across the globe. Interacting with a platform has also allowed SMEs to reach out to experts for specific requirements, helping them get work done based on their budget, from the right talent. However, crowd-sourcing platforms are execution platforms and still need time and effort from SME owners and come with a certain amount of homework.
Most SMEs understand the importance of marketing and how it can add more value, but some of the above issues have stopped SMEs looking into marketing over sales. As the market evolves hopefully something more integrated will come up to help SMEs focus on branding so they don't have to worry about sales or budget.
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