Magazine article The CPA Journal

What Small and Medium-Size Firms Think about Advertising

Magazine article The CPA Journal

What Small and Medium-Size Firms Think about Advertising

Article excerpt

CPAs have been free to advertise their services to the public for over 20 years, but local firms have been slow in using advertising to promote and increase the demand for services. The authors surveyed 2,000 small and medium-size firms to learn about their perceptions of the benefits to be derived from advertising. The results of the study are shown in Tables I and 2.

Implications oF Survey Results

The survey has produced some interesting results. Overall, larger firms are more positive about the benefits of advertising. More specifically, they recognize that advertising increases consumer awareness, if nothing else. The survey question concerning whether advertising increases consumer awareness of the company name received the highest positive response of any question. This is revealing when compared to the responses to other questions, which focused on firm benefits such as increasing the number of clients, services offered, and market segments serviced. Questions relating advertising to profit and increased annual billings received a neutral response. Therefore, do accountants perceive the value of name recognition to be worth the cost of advertising? Furthermore, does advertising ultimately translate into increased financial performance?

The study suggests that at this point in the advertising experience of public accountants, name recognition is perceived as important. Advertising apparently serves this purpose. The larger firms recognize that increasing name recognition is necessary before the number of clients, services offered, and market segments covered can be increased. Borrowing a marketing term, this is referred to as branding. According to this strategy, brand building leads to a considerable increase in financial performance.

Interestingly, disposition toward advertising to increase name recognition is related to the average age of the partners in a firm. We correlated the average age of partners with advertising favorability (the composite of all perceived advertising benefits) and found a significant inverse relationship. Younger partners feel that if their firms are to grow, they must advertise and follow a brand-building strategy. It can also be inferred that younger partners do not harbor ill feelings toward advertising as do older partners-who remember when advertising accounting services was banned.

The perceptions of the effects of advertising on the accounting profession are also noteworthy. Given the competitive nature of the accounting and accounting-- related services industry, we expected CPAs to say that advertising increases their overall quality of services offered, because clients coming to a firm via its advertising will tell others if they are satisfied (word-of-mouth advertising), which leads to increased customer traffic.

The response difference between small and medium-size fn-fns regarding whether advertising has a favorable influence on the public's perception of the moral and ethical character of public accountants is probably due to the type of advertising done by small versus medium-size firms. Small firms probably restrict their advertising to less expensive, traditional forms of advertising such as the Yellow Pages, company brochures, local newspapers, and radio. On the other hand, mediumsize firms may use more sophisticated, nontraditional advertising media such as sponsorships, charitable programs, and other events that create a positive impression on the public. These events associate a firm, in the public's mind, with moral and ethical character. Thus, medium-size firms have a more positive experience with advertising's favorable influence on the public's perception of public accountants. …

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