Confidence in the economy has fallen sharply again in Borrell Associates’ latest Business Barometer survey, but unlike the sharp pullback seen in 2020, most business owners say they’re keeping their advertising budgets intact rather than cutting them.
Borrell found confidence among small and midsize businesses has fallen sharply in recent quarters; however, the pattern looks nothing like 2020. In the fourth quarter of 2019, just 6% of SMBs surveyed by Borrell rated the economic situation as poor for running a small business. By the first quarter of 2020, that figure had jumped to 73%.
Intent to cut advertising spending over the following six months spiked alongside it, from roughly one in seven businesses to about one in two.
Sentiment has been undermined again recently, though less dramatically. About two-thirds of SMBs now say it has gotten harder to maintain a small business over the past six months. Looking ahead, 37% expect conditions to worsen over the next six months, up from the prior quarter, while the share expecting improvement fell from 25% to 16%.
Advertising intentions, however, haven’t followed sentiment downward. Plans to increase ad spending held steady at 17% across both quarters, while plans to decrease it barely moved, from 16% to 15%, and more than 60% of SMBs say they’ll maintain current spending levels.
Borrell Associates EVP of Market Intelligence Corey Elliott, who presented the findings on the Local Marketing Minute, pointed to earlier research on how SMBs managed inflation, in which 38% said they had cut their marketing budget. When the firm followed up asking which tactics helped and which hurt, cutting marketing ranked among the moves businesses regretted most. One surveyed owner said, “Cutting our marketing costs has not helped us in the long run.” The cuts, respondents said, also made it harder to hit branding and sales goals.
Elliott said, “Nobody in the barometer told us specifically that they were holding their budgets because they learned something from back then, but the evidence suggests the money is still out there. It’s just not automatically yours.”
The survey also found a trust gap worth noting: while 34% of SMBs use media companies and agencies as a source of marketing information, only 4% say they trust media companies most, compared with 32% who trust their peers most.
These findings follow Borrell’s broader read on the local ad market this year. In May, the firm reported local digital advertising growth had decelerated sharply, a trend Elliott said exposed a structural problem for legacy media reliant on digital growth to offset other declines.
