The economic recession has not only affected the major Wall Street companies like Lehman Brothers, Citibank, and Goldman Sachs, it has affected the pockets on almost every small business across the country. Every business owner should be looking to reduce costs and spend their advertising money to get the biggest return.
Small businesses are a significant contributor to our economy and their survivability must be taken seriously. This is a significant since companies smaller than 500 employees employ over half of the private sector workforce in the United States and have represented 64 percent of new jobs over the past 15 years.
According to the US Small Business Administration in a Report to the President, “more than half of the 763,000 jobs lost in the first two quarters of 2009 were lost in small firms.” According to the Bureau of Labor Statistics, approximately 4.3 million businesses with 19 or fewer employees closed their door during 2008.
Recession: Time to Grow
With statistics like these it is critical for business owners to take concern over spending their money to remain not only successful but in business. Many newspapers and bloggers will discuss the horrific effects of recession on small business, but savvy owners can take advantage of this downturn and grow their businesses.
It may sound odd to think of a recession as an opportunity to grow your business, there are significantly underserved or un-served customers who need your services. While many companies overstretched during the period before the recession and have subsequently over committed and gone under, wiser business owners understand the opportunities and customers who are left under served in current markets and grow their business in these areas.
We have found that during a recession most small business owners reduce their spending on everything especially advertising. The well cited case study that demonstrates the effect of advertising during a recession was done by McGraw-Hill Research. This study analyzed 600 companies during the 1981 recession. The results show that business-to-business companies that maintained or increased their marketing expenditures during 1981-1982 averaged significantly higher sales grown, not only during the recession but for the following three years. By 1985 those companies who were maintain strong ad campaigns had grown over 256 percent over those that cut their ad campaigns.
The study from Oregon State University and Western Oregon University dated April 19, 2009 confirms this finding in their report citing: “Firms that are able to increase advertising during recessions are likely to have stronger future earnings.”
Where to Spend Your Money
By now, we hope you are convinced the importance of maintaining your marketing strategy and continuing to be a strong advertiser. There are many opportunities for small business owners to spend the advertising dollars. Some of the traditional advertising forms: yellow pages, newspapers, television, and radio. The basic fact is that many of these are extremely expensive and the effectiveness is questionable in today market. The ability of traditional forms of advertising, or reach, is waning and is not offset by either its effectiveness or price.
- Yellow Page Directories are being replaced by online phone directories and searches. Bill Gates stated: “The Yellow Pages are going to be used less and less… These things always take time, but Yellow Page usage among people, say, below 50, will drop to zero—near zero—over the next five years
- Newspapers are struggling to maintain readership as more and more people are turning online for their up-to-date news and information. Arbitron reported that only one out three Americans read a daily newspaper and this is decreasing.
- Television advertising is hard to determine its effectiveness and reach due to technology like DVR and TiVo that allow users to avoid ads altogether. This is further complicated by the ability to watch passed episodes online with little or no ads either.
- Radio is being replaced by satellite which has not advertisers. And for those companies who still advertise on the radio, the Outdoor Advertising Association of America (OAAA) advertisers must buy deep (multiple stations and formats) to accumulate audience reach of over 50 percent, offsetting the cost effectiveness of radio if the target is a large, broad group of consumers.
The pricing of these advertising media is also extremely expensive both by itself and when you factor in cost per thousand impressions (CPM). For example a ¼ page Yellow Page Director ad for a year could run $650/month or $7,800 annually, while a ½ page ad could run as much as $15,000. A Newspaper 3x5-inch ad could be as much as $800/week twice a week for a year; this would total $9,600. In the top 100 Radio Markets, a one month campaign for a :30 second slot for 25 airings could run $4500. Advertisers look at the reach for their audience and Figure 1 shows the Cost Per Thousand (CPM) who listen or see the ad.
New vs. Old Media: And the Winner is...
The effectiveness of these traditional adverting is lacking. The Chief Marketing Officer at Proctor and Gamble, Jim Stengel, eloquently summarized the problem we are facing with traditional marketing and advertising options when he said, Today's marketing is broken. We're applying antiquated thinking and work systems to a new world of possibilities.
Small business owners are in the same tough position as Stengel, waying their options about where to advertise to maximize their reach. Many need to think about looking at non-traditional advertising solutions to meet their needs. Our door advertising and specifically vehicle wraps are a proven solution and provides cost effective implementation. A vehicle wrap is an advertising solution to envelope a vehicle in an advertisement thereby transforming it into a moving billboard for your company.
Vehicle wraps and fleet graphics are cost effective and reach a great audience. On average a vehicle will cost between $3000-$5000 for a full wrap on most standard vehicles—cars, trucks, and vans. This one time expense should last between three to five years. This equates to your marketing budget of $600-$1000 annually.
There are several studies that show the effectiveness of vehicle graphics over traditional forms of advertising.
- Outdoor Advertising Association of America (OAAA) 96 percent of survey respondents said vehicle wraps method of mobile advertising is more effective than advertising through traditional methods.
- Traffic Audit Bureau for Media Measurement demonstrated that an average vehicle wrap can generates between 30,000 – 70,000 impressions daily.
- 3M showed that in order to generate the equivalent annual impression of a $3,500 vehicle wrap a company would have to spend over $130,000 on television ads.
- Ninty-one percent of the people surveyed by the American Trucking Association (ATA) reported that they do notice words and pictures on vehicles.
- Fleet vehicle advertising boosts name recognition 15 times greater than any other form of advertising.
- Thirty percent of mobile outdoor viewers indicate they would base a buying decision on the ad they see.
As shown in Figure 1, vehicle graphics and vehicle wraps generate the most affordable CPM when compared with all forms traditional forms of advertising. Since vehicle wraps generate 30,000-70,000 impression days that is 11,000,000 impressions a year or $0.15 cents per impressions. The closest advertising solution to vehicle graphics is billboards at $1.78/CPM—which is a monthly renewable cost of $1,000-$8,000.
Regardless of your company, with a vehicle wrap you will be able to reach audiences of all ages, genders, background, income levels, and professions. More than 95 percent of all Americans are reached by media targeting vehicle drivers and passengers. Mobile advertising is also able to reach pedestrians as eight out of ten Americans report they have walked in a town, city or downtown area, on average 6.1 miles in the past seven days. This pedestrian traffic represents a significant reach opportunity for advertisers.
As a small business owner or manager you are already commuting to work in your own company or personal vehicle. Vehicle wraps and fleet graphics can effectively enhance your exposure to your clients.
When you or your employees are driving to meet clients, make deliveries, or stop at a jobsite, you are advertising. You will reach thousands of perspective clients’ daily wit ha vehicle wrap. You will even reach people when you are stopping at the grocery store or at the restaurant for lunch. Studies have shown that the vehicle wrap has increased the sales of advertisement in the range of 107 percent.
If you are looking for a smart advertising solution to help you through these hard economic times a vehicle wrap could be the ideal solution.