For all of us, Covid-19 has upended ‘business as usual’ - we clap for the NHS, talk of PPE and share WFH tips. But what impact is the pandemic having on businesses? In particular, the SMEs that make up 99.9% of all private sector business in the UK?
According to the Advertising Association's Ad Pays 7 report, small and medium sized enterprises grew by 63% in the last two decades; a period of exponential growth that has run parallel to that of digital advertising, with the relatively low cost and ease of digital channels helping smaller businesses to flourish.
While this entrepreneurial spirit has led to ingenuity, creativity and innovation, we’re now faced with stark questions: how will SMEs weather the Covid-19 pandemic? And how can the digital ad industry help companies recover in the wake of the outbreak? At IAB UK, we commissioned MTM to conduct a study into SMEs earlier this year surveying 800 businesses, before ‘coronavirus’ entered into our mainstream lexicon and lockdown became the everyday.
The study - which seeks to understand the role that digital advertising plays for SMEs and the support that businesses need to maximise results - will be released in June. However, when it became clear that Covid-19 has triggered seismic economic turbulence, we set out to understand how SMEs are dealing with it. How concerned are they? Have their priorities changed? And do they think that digital channels can help them?
The results reflect, as you’d expect, a mix of concern and hope; highlighting some of the real challenges and hard decisions that businesses are having to make in the short-term. Nearly two thirds (64%) of UK SMEs are concerned about the future of their businesses as a result of the current pandemic, and 70% feel it is more important than ever to communicate with customers about their services.
As we all adapt to new routines and habits, SMEs are also considering diversifying their marketing strategies with over half (58%) looking for new ways to communicate with their customers during this time of social distancing. The same amount believes that the pandemic will have a negative impact on the digital ad industry in the short-term, echoing wider industry predictions.
However, there is cause for cautious optimism. While there is no denying the short-term challenges faced by both SMEs and the digital advertising industry, two thirds (64%) of those surveyed are confident that their businesses will recover following a challenging few months.
What’s more, half of all SMEs agree that digital advertising is more important to their marketing success during this time of crisis. Just as SMEs and digital advertising fuelled one another's growth over the past 20 years, could the two could mutually aid each other's recovery in a post-pandemic world?
While our current situation shows that predictions should always be taken with a pinch of salt - did anyone see this coming? - these findings show that digital advertising remains an important part of the SME marketing mix and highlights the role it can play along the road to recovery.
There are undoubtedly challenges facing SMEs and it’s critical that the digital industry can help reinvigorate this unique sector in the months ahead. With the results of our study due to be released next month, we hope to make this task an easier one - mapping out how small businesses can unlock the value of digital advertising and maximise investment.
Elizabeth Lane, head of research & measurement at IAB UK