Borrell: Most Small Businesses Plan To Maintain Or Increase Ad Spending.

Small and medium-sized businesses may be growing more uncertain about the economy, but they aren’t responding by slashing their advertising budgets. New data from Borrell Associates shows most SMBs plan to keep marketing spending steady during the second half of the year, even as concerns about the U.S. business climate intensify.

Borrell’s quarterly Business Barometer — based on responses from 149 small and medium-sized businesses surveyed June 9-26 — finds 62% of SMBs expect to spend about the same on advertising and marketing during the next six months as they did during the previous six months. Another 15% plan to increase spending. Together, it means three in four (77%) expect to maintain or increase their advertising investment.

The findings suggest advertising has become a relatively resilient line item for many small businesses, even as confidence in the broader economy weakens.

“The proportions expecting to spend more or spend less on ad budgets has not shown major fluctuations over the past two years,” Borrell says in the report. While expectations for the economy deteriorated between the first and second quarters, it says that doesn’t appear to drive a corresponding change in ad spending.

Making the resilience more noteworthy is there has been a shift in economic sentiment among local business owners. Nearly one-third (31%) of respondents characterize the current environment for sustaining a small business as “poor.” That’s up from 21% in the first quarter. At the same time, two-thirds say it has become harder to sustain a small business in the past six months.

Looking ahead, SMBs remain cautious. Borrell says more than one-third (37%) of the respondents it surveyed expect economic conditions for small businesses to worsen during the next six months, compared with just 16% who anticipate improvement. Nearly half (46%) expect conditions to remain about the same.

Yet growing pessimism is not translating into a broad retreat from advertising.

“I don’t think it’s optimism. I think it’s freaking exhaustion,” Borrell Executive VP Corey Elliott says. “Main Street has been hammered for years, and at some point the question stops being ‘how do I grow?’ and becomes ‘how do I stay open?’ It’s not ‘do more with less.’ It’s ‘stay afloat with less.’ When you’re just staying afloat, you keep your head down and wait to see what tomorrow brings.”

Elliott says many business owners have also learned the hard lesson that marketing is one of the last places they should look for savings. “Some of them have learned that cutting marketing is a lousy way to save money,” he says, pointing out that steady spending levels also means budgets aren’t growing for many SMBs. “So call it resilience, not a rebound. They’re not fleeing — they’re bracing,” Elliott says.

Survey results back that up. While economic confidence weakened noticeably during Q2, advertising intentions remained largely unchanged, with the number of businesses planning to increase spending nearly matching those expecting to reduce it.

Borrell’s historical data suggests that stability has become the norm. Quarterly surveys dating back two years show relatively little movement in the proportions of businesses planning to spend more, less or about the same on advertising, even as economic sentiment has fluctuated.

Elliott says experience may also be influencing today’s decisions.

“The businesses that went dark to save money back in the day tended to lose ground they never got back,” he says. “If today’s small businesses are holding the line even while they’re scared, maybe that lesson finally stuck.”