SMEs: What Is the Real Addressable Market? Neal Polachek, Independent Industry Advisor & former CEO, The Kelsey Group Conference presentations often tell us there are millions of small businesses (ie - SMEs, SMBs) that represent the addressable market for digital advertising. But recent survey data suggest that many SMBs are lifestyle businesses whose owners don't want to grow. If accurate the implications for the market fare potentially radical. This session will explore the "real, addressable SME market." It also asks whether the products being sold to SMEs are truly aligned with their needs.

1. What is the “Real”
Addressable Market?
Neal Polachek
Board Advisor –
vSplash/BuzzBoard
November 19, 2013

2. Who am I and Why am I Here?
- Former CEO – The Kelsey
Group and President –
BIAKelsey
- 20+ years as industry
analyst
- Board advisor for, and
consultant to, large and
small companies

3. Why do we Care about SMEs
It is where Local and Social Intersect

4. Some Key Trends/Facts
• SMEs: 95 – 98% of Business
establishments in most countries
• SMEs: employ upwards of 67% of private
sector jobs in developed markets
• SMEs: drive as much as 50% of GDP in
developed countries
• SMEs: drive a smaller % of GDP in
developing countries but this % is
increasing

5. 160 - 200 Million Identified
SMEs
North America; 0
ROW; 0
Western Europe; 0
Eastern Europe; 0
Latin America; 0
Asia; 1
Sources: Various Government Sources

6. SMEs Swim With the Sharks

7. And the Sharks Want Their
Food

8. 1999 – First Wave Kelsey Local
Commerce Monitor - Illustrative
Little
fragmentation
& high
margins all
around
Leaflets; 5%
Direct mail; 10%
Newspapers; 15%
Yellow Pages; 70%
Easy to Evaluate, Easy to Buy, Easy to Sell

9. By 2013 – It Looks More like This Illustrative
4% 3%
3%
High
fragmentation
& low or no
margins all
around
15%
10%
10%
5%
10%
5%
10%
15%
10%
Website
Social
Landing Pages
Blogs
Mobile
Video
Leaflets
IYP
Print YP
Newspapers
Radio
Tv
Difficult to Evaluate, to Buy, to Sell

10. SME Commerce Meets SME
Cloud
SME Share of
Global GDP of
$70T = 40% or
$28T USD
SME Share of
Cloud
Computing by
2015 = 65% or
$30B USD*
*Source: McKinsey 2011

11. Commerce Solutions for SMEs
Marke
t
Trans
act
Conn
ect

12. Market
• Traditional and Digital
– YP
– Search
– Newspaper
• eCRM
– eMail, rep mgt.
• Web presence
– Mobile, responsive
• Social
– Blogs, social updates
Acquire
and
engage
customer
s

13. Connect
• Connectivity
– Broadband
– Wireless
• Devices
– Desktop
– Tablet
– Mobile
Connect
with
customer
s

14. Transact
• POS
– Square
– Xyz
– Etc
• Accounting
– Billing
– AP/AR
– Taxes
Transact,
track, bill
and
collect

15. Market Size – 2013 and 2018
18
30
140
$505B
$365B
207
206
269
Just Over 1% of SME GDP
(assumes SME Share of GDP is 40%)
Market
Connect
Transact

16. Advertising and Devices Today
Transaction; 0.03
Accounting; 0.02
Wired Connectivity; 0.13
Advertising; 0.27
$365B
Computing Device; 0.1
eCRM; 0.02
Web Presence; 0.01
Social; 0.08
Wireless Device; 0.34

17. Conversations and Content Tomorrow
Transaction; 0.04
Accounting; 0.02
Advertising; 0.15
Wired Connectivity; 0.1
Computing Device; 0.12
eCRM; 0.02
Web Presence; 0.02
$505B
Social; 0.22
Wireless Device; 0.32

18. Penetration Rates will Change
87
85
Market
2013
2018
Connect
Transact
68
59
57
49
31 30
36
40
43
39 40
33
26
21
9
26

19. And the Money will Flow . . .
161
2013
Market
2018
Connect
Transact
123
109
100
78
58
30
6 9
5 9
38
47 50
7
12
10
18

20. Thank You
nbpolachek@gmail.com
neal@mybuzzBoard.com
twitter @nealbp