Is that because of the technology being used? I find that an odd statement unless the sites don't rank. If you were given the oppertunity to air a free commercial on a national station would you turn it down? Companies should use more than one form of marketing device, but to turn away free brand exposure is a little arrogent by those businesses IMHO.
Even regional business will benefit from SEM. I am surprised that you feel like they can't be helped by search engines. This weekend alone I found small businesses in my area and spent money at their store because of their site. If nothing else a business should come up for a search of their name.