How agencies can unlock the small-to-medium-sized client market

The advertising market is evolving quickly as brands bring more media buying in-house, consultancies acquire innovative agencies and digital platforms reduce the need for go-between brokers. It’s becoming increasingly difficult for ad agencies, big and small, to expand their revenues across the Fortune 500 brands.
At the same time, there’s a huge opportunity with small-to-medium-sized businesses, which represent 99 percent of the companies in the U.S. The SMBs category includes 30.2 million players with 500 employees or less, and these businesses are becoming more sophisticated—90 percent of them use a combination of traditional and digital ads, while 73 percent do social media. And yet, just 3 percent of SMBs use an external advertising or marketing agency.
SMBs are ripe for agencies’ help. (Industry media outlets publish round-ups of the worst local ads for a reason.) There are local chains in every category—just think of the campaigns your agency team could be running for locally owned amusement parks, sports events and other entertainment venues this summer. The potential seems endless. What's more, 91 percent of small businesses plan to increase their advertising spends in 2020.
SMBs are also time-starved and could benefit from the help of agencies. According to MavenLink, a major reason why small business owners value time the most is that they're constantly struggling to keep up with the demands of their business.
Agencies could be missing out on significant additional revenue if they don't build a plan for this market. SMBs have access to digital marketing tools and know that social media marketing is important; agencies could apply their expertise and strategic insights to optimize these efforts.
There are two main kinds of SMB advertisers: those SMBs that don’t know even who their customers are; and those that know who their customers are but have difficulty crafting good campaigns. Agencies can help with both types.
SMBs drive the economy
SMBs are the engine of the American economy. The segment accounts for nearly half the country’s employees and was responsible for about two-thirds of net new job creation from 2010-2017. SMBs is also a diverse category, encompassing notable brands and even aspiring unicorns, like MailChimp, Basecamp and Dutch Bros. (the go-to coffee retailer for Oregonians and many Northern Californians). When agencies think about SMBs, they should think beyond independent hardware stores, one-location restaurants and mom-and-pop shops. Advertising and marketing budgets of varying sizes are largely being ignored by the agency world.
Of course, there are exceptions, and inspirational SMB-agency examples exist. For instance, independent music label Downtown Records worked with BBDO New York on a campaign that last year garnered multiple awards at Cannes, including the Digital Craft Lions; Harmelin Media has run several successful campaigns for regional convenience store Sheetz; and, working with Postmodern Marketing, mattresses startup The Slumber Yard credited digital advertising for its recent rise to becoming a $2.5 million business.
Not as novice as you think
Many SMBs are already investing in digital. For instance, 43 percent of them say that improving customer experience and retention is their top strategy to improve revenue growth.
Agency players should consider themselves well-suited for helping SMBs achieve many of the same goals as their big brand clients, just on a different scale. For instance, everyone wants new customers; it’s every businessperson’s top challenge. Powered by data, digital platforms afford SMBs the opportunity to reach the right buyers at the right time and right place. By working hand-in-hand with digital platforms to drive sales for SMBs, agencies can help level the playing field with bigger brands.
Unlocking this market will take commitment
Agency execs will have to invest time and budget into tapping the SMB market. They should go to major cities and mid-markets and hold seminar-style events to demonstrate the different ways the SMBs can use an ad agency to drive sales. They will also have to prepare pitch decks that emphasize their ability to add value (i.e. ROI) to what SMBs are already doing. For instance, while bigger brands are more likely to value a mass appeal approach to advertising, SMBs may value more granular audience targeting. Your agency will have to build up an SMB's confidence by establishing a test budget to prove out ad strategies. Your account team will have to help the client navigate platform options while leveraging best practices for campaign creation and ongoing optimization.
By proving their capabilities to SMBs and showing they understand a business’s customers, agencies can help SMBs create a holistic strategy and increase ROI. Agencies must have an unusually strong ROI mindset because SMBs are obviously working with smaller budgets compared to big brands.
Indeed, it’s going to take commitment. But as agencies adapt to a fast-changing digital landscape, they should set their sights on this massively underserved market. By demonstrating their ability to help SMBs become more successful, agencies can unlock this economic opportunity that’s hiding in plain sight.