The marketing industry needs to understand the fundamental differences between small and medium-sized businesses if SMEs are going to make stronger commitments to advertising investment, says John Cridland, director general of the Confederation of British Industry.
Speaking at the Advertising Association’s (AA) annual LEAD event on Thursday, Cridland called for the abandonment of the phrase SME entirely, arguing that in order for smaller businesses to overcome barriers that are stopping them from making investments in advertising, the industry needs to “further segment the market.”
Currently, 99% of all UK businesses are SMEs and account for 50% of jobs. However, just 30% of SMEs spend money on advertising – largely due to financial concerns. The AA has argued that it is hampering economic growth, with the UK economy missing out on an estimated £40 billion each year.
Discussing the implications for SMEs and advertising, Cridland said that different asset classes have “very different” needs and intentions – from speed of growth to financial access – and that while medium-sized businesses are predominantly growing, small businesses often have no intention of growing at all.
However, despite the current divide between SMEs and advertisers, Cridland was optimistic about a future where the two will work together – primarily through digital opportunities – as long as smaller businesses are made aware that advertising opportunities are financially viable and not just for big brands.
“The next decade could be Britain’s decade,” he said, “and it will be [because of] the branded goods and services of our small, medium and large companies selling to the middles classes of the emerging economies through a principally – but not exclusively – digital offer.
“That is out future as an economy.”
The news comes as the AA releases a new report on the role that SMEs play within the UK economy, claiming that despite advertising stimulating competition, innovation and expansion, SMEs – which play a “critical role” in supporting economic recovery – are still reluctant to make any investment.
