Another (Limited) Way to Segment SMBs

If you wanted to sell small businesses on advertising solutions for their business, here’s a new way to break them down:

1. “Branded branches,” (e.g., Bank of America), which reportedly comprises 60% to 65% of the advertiser spend. This might be thought of in the conventional approach as the “national-local” segment.

2. Co-op sellers (e.g., insurance or real estate brokers/agents), which represents the second largest part of the local ad spend at 305 to 35%. In the conventional way of thinking, this group comprises the franchisees (in many cases) and the national-local segment as well in some cases.

3. Independents, comprise 1% to 2% of the overall local ad spend. This is a numerous group but with little to spend relatively speaking. These are the lawyers, plumbers and so on.

The above breakdown comes courtesy of Greg Sterling, who highlights some research by Wayne Reuvers, CEO of Live Holdings.

Of course, lots of caveats in how to interpret this breakdown.  Consider that:

Category #1 above is really big corporations. In the context it is discussed, they are talking about local advertising spend by branch offices of huge companies. In that limited context the category is probably meaningful. But if you’re not a publisher or ad network trying to sell advertising, just remember these are really big companies, not small businesses.

Category #2 is focused on the fact that co-op ad money is coming from a larger entity — again you have that focus on the bigger entity, who happens to be footing part of the bill in this case.

Finally, all the rest of the small businesses are lumped together with a hint of disdain in category #3, and not broken down into any meaningful subcategories. So it doesn’t help you figure out how to sell to this group.

The only thing I would add about this categorization is:  it’s really only applicable if you are selling advertising on a large scale.  I can’t think of any other context in which it applies, can you?