Borrell's latest study reveals bad and good news on local ad spending

Small and medium-sized businesses continue to feel imperiled, especially by the pandemic economy, but 65% see hope in the Local Journalism Sustainability Act.


Since 2016, Borrell Associates — a Williamsburg, Va.-based consultancy — has been taking the quarterly pulse of small- and medium-sized businesses (SMBs) to better understand their marketing and advertising strategies and concerns. Borrell empaneled a group of SMB representatives, including owners or those responsible for marketing decisions. The firm surveyed them again in August 2021, compiling the data in the September-published "Q3 Borrell Business Barometer: Signs of Trouble Ahead."

Those "signs of trouble" are formidable; 40% said they expected economic conditions for small businesses to worsen over the next six months. A mere 14% expected a sunnier forecast.

COVID-19's delta variant is top-of-mind for small and medium-sized businesses.

 “The intriguing thing here is that their outlook on current economic conditions slid back to where it was in February of this year,” Corey Elliott, executive vice president of local market intelligence for Borrell Associates, explained. “That’s not horrible — and certainly better than all of 2020, but it is as if the optimism I saw in May (and) June has tampered a bit. … When we ask them to look out over the next six months, here, too, you see some pessimism creeping in, at least more than was present February to June."

Despite that cloud of concern, there was some encouraging news for news publishers, SMBs and the advocates who've been working on getting legislative relief.  

Borrell Associates’ Q3 study also queried respondents about one of the provisions in the proposed Local Journalism Sustainability Act (LJSA), currently getting a markup in the U.S. House of Representatives Ways and Means Committee. The LJSA includes incentives for small and medium-sized businesses to advertise in local news outlets, including TV, radio and newspapers.

Dean Ridings, CEO of America’s Newspapers — integral to getting the LJSA before Congress — explained, "The Local Journalism Sustainability Act has three components, with a tax credit for journalists, a tax credit to subscribers of local news organizations, and a tax credit to small businesses — less than 50 employees — of up to $5,000 per year for advertising in qualified local newspapers and other local media. The latter component would certainly not only help the news media with the increased spending, but it would also help the businesses. This part of the bill makes sense on multiple levels and is particularly needed, as the pandemic has severely impacted many small businesses."

A significant majority of Borrell Associates panelists — a whopping 65% — said they’d be likely to tap this resource.

“A concern among a lot of SMBs, whether likely to use it or not, is the hoops they would need to jump through to get it,” Elliott said.

Some of the respondents felt the amount was insufficient.

"There are a lot of small businesses that would see results in an advertising buy like this, even if it is just an annual spend of $5,000. That can go a long way in small markets, and it can also have value in larger markets,” Ridings said.

Asked if he felt the provision went far enough or if he'd like to see a bigger number, Ridings answered, “Additional investments could provide even better results in stimulating the economy, so we would certainly be open to an increase, but we know that you have to keep the total cost of the bill in mind."

Borrell Associates’ Q3 study welcomed participants to expound on their thoughts about the LJSA. One said, "I think it is a great way to give back to the community of small businesses... (it) promotes stores and local people in our community. Small business is the hub of the communities."

Other participants weren’t quite as enthusiastic.

"When you comb through the open-ended responses, you can see two camps starting to form, and they coalesce around the thought of who the money is 'for.' There is not a small amount of SMBs who see it as the Federal government's way to help out local SMBs, and surprisingly, there is a generous amount of that group who does not want anything from the government and sees it as the feds trying to stick their bureaucratic nose into the affairs of Main Street," Elliott said.

"The other group, slightly smaller than the first, sees this as a way to help out local media companies," Elliott continued. “The SMBs with this attitude seem to have a much more positive response to the stimulus.”

News publishers anxiously await Congress’ next move. As an advocate for the Local Journalism Sustainability Act, Ridings knows just how much is at stake.

“Local newspapers and other local news media are a critical part of the communities they serve, and the citizens are better off with the strong local voice provided by professional journalists,” he said. “I think that legislators who have seen decreases in the number of newspapers in their districts are very aware of the downside of losing their local newspaper, and they also see the negative impact when fewer journalists are reporting. In addition, there are known cases of increased government waste and even malfeasance when there is no local newspaper."


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