TBJ 2018 SMB Insights Presentation 6 13 18 · marketing communications budget in 2017?” Annual...

CAUTIOUS OPTIMISM

☆ 16th Annual Survey

☆ Nationally representative

☆ 1,058 completed surveys

☆ Business owners, executives and key decision makers

☆ Businesses with 5-499 employees

☆ Phone recruit - online survey

☆ January 2018

Note: U.S. Census Bureau data and other external research are also used in parts of this report.

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THE BUSINESSJOURNALSA DIVISION OF ACBJ

1 SMB Market Size and Outlook

2 SMB Owners and Their Concerns

3 Technology Usage and Attitudes

4 Media Usage and Preference

2018 SMB Key Insight Areas

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MARKET SIZE AND GENERAL OUTLOOK


The SMB market continues to grow

5Source: Small Business Research Center, based on Census and Bureau of Labor Statistics data

3,381,125

3,422,130

3,464,503

3,540,322

3,582,517

3,627,559

2013 2014 2015 2016 2017 2018

Number of U.S. Businesses with 5-499 Employees

5


Growth of SMBs has been spread across the coasts and south over the last five years

6Source: Small Business Research Center, based on Census and Bureau of Labor Statistics data: Growth in number of SMBs with 5-499 employees from 2013 to 2018

10% - 15% growth5% – 9.9% growth0.1% – 4.9% growth-0.1% - -4% growth

Washington

Oregon

Montana

California

Arizona

Wyoming

Nevada

Idaho

Utah

Colorado

NewMexico

Texas

Oklahoma

NorthDakota

SouthDakota

Nebraska

Kansas

Louisiana

Arkansas

Missouri

Iowa

Minnesota

Wisconsin

IllinoisIndiana

Michigan

Ohio

Kentucky

Tennessee

Florida

MississippiAlabama

Georgia

SouthCarolina

NorthCarolina

Virginia

WestVirginia

Pennsylvania

Maryland

NewYork

Maine

Alaska

Hawaii

Delaware

NewJersey

Vermont

NewHampshire

Massachusetts

Connecticut RhodeIsland

6


SMBs continue to have a positive outlook

7“How do you think your company’s prospects will change over the next 12 months? By prospects, we mean the general success of your business.” (2008-2013) “What is your level of confidence in the success of your company (based on revenue, profitability and growth) over the next 24 months?” (2014-2018)

Positive Outlook About Future Business Prospects

77% 76%73% 73%

81% 79% 80% 80%

Dec 10 Dec 11 Dec 12 Jan 14 Jan 15 Jan 16 Jan 17 Jan 18

7


SMB owners also have confidence in the future of the U.S. economy

8

Confidence the U.S. Economy Will Improve Over the Next 24 Months

26% 24% 28%

19% 24%26%

8%13%

15%

2016 2017 2018

61%

53%

Extremely Confident

Very Confident

Confident

69%

“What is your level of confidence in the success of the US economy over the next 24 months?”


SMB confidence comes from seeing continued growth in both their company sales and their personal net worth

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27%30%

35% 36% 37% 40%

2013 2014 2015 2016 2017 2018

“What would you estimate your company’s average, annual percentage sales growth rate has been over the last three years, that is on a per year basis, from 2015 through 2017?” “Which of the following best describes your total net worth?”

59 %65%

71% 70% 71% 73%

2013 2014 2015 2016 2017 2018

Net Worth Over $1 MillionSales Increase


SMB OWNERS AND THEIR CONCERNS


SMB owners are highly educated and upscale

Upscale$175K average HHI

Mid-50s54 Average Age

Educated70% college grads+

Men68%

$7.9MAverage annual sales

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Concerns regarding employees and customers are top of mind for SMB owners

46%

63%

40%

41%

44%

44%

49%

64%

45%

46%

50%

51%

Rising costs of doing business

Cost of health insurance/benefits

Possible tax changes that could hurt business

Maintaining existing customer base

Being able to attract new customers

Being able to find & keep good employees

2018 2017

% Very Concerned

Business Concerns

Concern Has Increased Significantly From Last Year

Concern Has Held Steady From Last Year

12“What are the issues that you’re most concerned about? Please indicate your level of concern for each of the following areas as they relate to your business.””


Owners of smaller SMBs have a greater concern about finding and keeping good employees

“Very Concerned” About Being Able To Find And Keep Good Employees

“What are the issues that you’re most concerned about? Please indicate your level of concern for each of the following areas as they relate to your business.”

Number of Employees

13

50%47%

49%53%

43%

48%44%

42%

53% 53%

36%33%

5-19 20-49 50-99 100-499

201620172018


Local sales are the core market for most SMBs

“Using 100 percentage points, how would you break down your company’s sales among the following three geographic categories?”

Company Sales By Geography

28%

60%

92%

Outside the U.S.

Rest of the U.S.

Within Local Area

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Two-thirds of SMBs spent less than $50,000 on their advertising/marketing budgets annually

“How would you rate the impact of advertising locally for your business?” “What was your company’s annual advertising and marketing communications budget in 2017?”

Annual Advertising/Marketing Budget

Under $25,00050%

$25,000 to under $50,00013%

$50,000 or more23%

No advertising/marketing budget14%

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SMBs plan to use a mix of both traditional and digital advertising vehicles in the next 1-2 years

“Which of the following marketing and advertising vehicles has your company used in the past 12 months?” “Which of the followingwill your company use more of in the next 1-2 years?”

4%

4%

5%

6%

8%

9%

9%

11%

13%

14%

15%

20%

21%

21%

21%

26%

28%

35%

National advertising

Native online advertising

Outdoor advertising

Broadcast advertising

SEM (i.e., buying key words on Google)

Mobile advertising

Online display advertising/sponsorships

Videos (e.g., demonstrations, features via YouTube)

Sales promotion (e.g., price discounts, flash sales, etc.)

Public relations

SEO (i.e., optimizing your website for searches)

Print advertising

Direct mail

Trade shows & events

Local advertising

Social media marketing

Social media advertising

Email marketing

Planned Usage of Advertising/Marketing Vehicles In Next 1-2 Years

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TECHNOLOGY USAGE AND ATTITUDES


Two-thirds of SMBs have a company website

18“Which of the following products or services have you used in the past year for your business?”

Yes

67%

No

33%

Have A Company Website


Technology is a critical and growing part of business expansion

19“Thinking about your company website, how much do you agree or disagree with the following statements.” “To what extent has the national expansion of your company been facilitated by your business website or some facet of the Internet?”

Company Website Design and Usage

30%

48%

80%

Our company website ise-commerce enabled

We use data from ourcompany website to

analyze customer trendsand inform our business

decisions

Company website isdesigned for mobile, aswell as desktop/laptop,

usage

% Agree

43%

15%

National expansion has been facilitated bycompany website

National Sales Expansion Facilitated By Company Website

58%


But technology is increasingly seen as risky

“Very Concerned” About The Safety And Security Of Your Firm's Technology, Email, And Documents

28%

38%

27%

47%

31%

45%

2017 2018

Total $25M+ in Sales Generate Revenue From Social Media

“What are the issues that you’re most concerned about? Please indicate your level of concern for each of the following areas as they relate to your business.”” 20


SMBs awareness of emerging technology is speeding up

21“Which of the following emerging technologies are you aware of?”

Awareness of Emerging Technologies

2017 2018 Change

Artificial Intelligence 44% 56% +12

Virtual Reality 53 63 +10

Robotics 49 57 +8

3D Printing 65 72 +7

Biometrics 32 38 +6

Mobile Solutions 46 51 +5

Internet of Things 25 28 +3

Chatbots 12 15 +3

Cryptocurrencies NA 47 --

Blockchain NA 16 --


MEDIA USAGE AND PREFERENCE


Trust in journalism rebounds as trust in platforms declines

54%

52%

54%

51%

56%

54%

59%

53%

50%

53%

54%

54%

53%

51%

2012 2013 2014 2015 2016 2017 2018

Source: 2018 Edelman GlobalTrust Barometer“When looking for general news and information, how much would you trust each type of source?” Top-4 Box of nine-point scale“Journalism” is the professional creation of news content, and is represented by traditional media and online-only media.“Platforms” is how the content is delivered or discovered and is represented by social media and search engines.

Journalism:Traditional and online-only news sources

Platforms:Search engines and social media platforms

Trust Each Source For General News & InformationTop-4 box rating in a 9-point scale

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Local news sources are now more trusted

Source: Pew Research Center's American Trends Panel Poll, March 2017 and January 2016

“How much, if at all, do you trust the information you get from...________--a lot, some, not too much, or not at all?”

Trust The Information You Get From...

77% 77%74%

34%

85%

76% 74%

35%

Local News

Organizations

Family, Friends &

Acquaintances

National News

Organizations

Social Media Sites

2016

2017

24


A variety of media channels are used by SMB owners to consume business news/information

25“When it comes to consuming business news and information, what media channels are most important to you? Please select all that apply.”

9%

22%

32%

30%

31%

51%

56%

Non-broadcast channels

Social media

Radio

Business printpublications

Daily newspapers

Television

Digital or online

Important Media Channels For Consuming Business News/Information

25


SMB owners also use a variety of non-broadcast mediums, YouTube being the most popular

26“Which of the following non-broadcast mediums have you personally used in the past year?”

Non-Broadcast Mediums Used Past Year

17%

18%

23%

25%

28%

37%

45%

46%

51%

72%

Blogs

PPV

Podcasts

Company Sponsored Webinars

Downloads Into iPod, SmartPhoneor Computer

DVR/TiVo

Music Streaming

Satellite Radio/Sirius XM

Video Streaming Services

YouTube

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SMB owners read a variety of different types of print media focused on business

27

71%65%

60% 59%

Business Section of LocalNewspaper

National Newspaper(e.g., WSJ, NYT)

National Business Publication(e.g., Forbes, Fortune)

Local Business Journal(e.g., Crain's, AtlantaBusiness Chronicle)

Print Readership

“Of the media and other activities that you engage in, for what reasons do you use each? Please select all the reasons that apply.”

Average # Hours Use Per Week

1.5 2.0 1.5 1.4

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8 of 10 SMB owners visit financial/banking websites and do so an average of 2 hours/week

28“In an average week, how much time do you spend with each type of media or other activities shown below?”

Use Digital/Websites/Apps


2.2 2.1 3.0

82%

70% 68%

Financial/Banking/Investment Websites /Apps

Business Websites/Apps Social Media

28


Facebook and LinkedIn are most common social networks used for business; a third of SMBs post to social media at least once a week

Social Networks Used for Business

“For each Social Network, please click whether it is used for business reasons, personal reasons or both.” “How often does your business post to social media?”

1%

2%

2%

7%

11%

13%

20%

21%

43%

50%

Periscope

Foursquare

Snapchat

Pinterest

Instagram

Facebook Messenger

Twitter

Google+

LinkedIn

Facebook

Frequency Business Posts to Social Media

Ever Post (Net) 70%

Once a week or more often 35

Several times a month 13

Once a month 7

Once every 2-3 month 6

Once every 6 month 3

Less often than once every 6 months 6

Never Post 30

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Print and Digital play important and complementary roles

Preferences For Print and Digital Media

“Thinking specifically about business news and information, please tell us about your preferences for electronic versus print media by indicating how much you agree or disagree with each of the following statements.”

79%

79%

83%

87%

92%

72%

77%

81%

Smartphone/Tablet Save Me Time

Far Easier To Access

Immediate Access to Breaking News

Skimming & Browsing

Wider Array of Sources

Can Take In More Thoroughly

Allows Far More Relaxed Reading

More For Detail, Specifics & Precision

Print

Digital

% Agree

30


Print and Digital’s complementary strengths are preferred by different audiences

“Thinking specifically about business news and information, please tell us about your preferences for electronic versus print media by indicating how much you agree or disagree with each of the following statements.”

Reasons for Preference for Print & Digital Media(Agree Completely/Mostly)

Total 100-499 Employees

$25M + in Sales

Does Business Internationally

In Business 10 Years or Less

Under 40 Years Old

PRINT

Take in business info more thoroughly 43% 57% 58% 47% 44% 44%

More relaxed reading 46 41 45 53 48 44

More for detail, specifics & precision 49 50 60 55 48 45

Electronic is more for skimming and browsing 51 59 59 53 55 56

DIGITAL

Far easier to access 49 54 46 55 63 62

A wider array of sources 61 62 69 65 75 65

Tablet or smartphone saves me time 45 44 45 48 62 55

Immediate access to breaking news 53 52 62 57 63 61

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Nearly all SMB owners watch television during the evening and prime time, watching an average of 3 and 4 hours/week respectively


Television Viewership by Daypart

54%

Early Morning(6am-10am)

Daytime (10am-6pm)

Evening (6pm-8pm)

Prime Time (8pm-11pm)

Late Evening(11pm or later)

Cable News (e.g,CNN, MSNBC)

89%

54%

68%

89%

68%


1.8 2.0 3.1 3.9 2.2 2.9

32


Nearly all SMB owners listen to the radio and spend 1.5 more hours doing so on a weekday, perhaps during their commutes to work


Listen to Radio

92%88%

Weekday Weekend

Average # Hours

Use Per Week

3.6 2.1

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2018 will be a year of “Cautious Optimism”

1 SMB market is growing Number of SMBs is growingThey are expanding from the coasts

They remain a vital market in 2018

2 Optimism continues Confidence continues to riseRevenues are growingPersonal wealth is growing

They will be investing in their businesses while the economy is strong

3 Major concerns remain Difficulty finding qualified staffMaintaining their customer base

There’s an opportunity for marketers to address their concerns

4 Technology cuts both ways

Technology has enabled an expansionThey’re worried about data security

The benefits of technology must be balanced with safety assurances

5 Trust in journalism and local news is up

Local news sources are more trustedDigital and print are complements

Local business news is a trusted context for brand messages

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Contact

About The Business Journals:

The Business Journals is a division of American City Business Journals (ACBJ), the largest publisher of metropolitan business newsweeklies in the United States, with 43 business publications across the country reaching more than 3.6 million readers each week. We also offer specialty publications for sports fans, sports business readers and classic car enthusiasts.

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Amy InnerfieldAssociate Research [email protected]

Tyler ReavisResearch [email protected]

mailto:[email protected]

mailto:[email protected]

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