Local Advertising Hits A Tipping Point

“(W)e’ve reached the end of the Golden Age of Advertising,” says pioneering media researcher Gordon Borrell in a new report that paints a very realistic picture of the state of local advertising. This report — Local Advertising Hits A Tipping Point — is a 5‐year follow‐up to a report published in 2010 and tracks the opinions of 7,228 small and mid‐size advertisers (SMBs).

While there is a lot of between‐the‐lines conclusions to be drawn, here are just a few of the report’s findings. Remember, these are advertisers speaking, or it would be more appropriate to call them “the people formerly known as the advertisers.”

  • 82% of SMBs have established their own media channel in the form of a website or social media page.
  • Since 2007, spending has skyrocketed to the point at which businesses last year spent 72% more on marketing services and promotions than they had spent 10 years earlier. Meanwhile, the annual expenditure on local advertising was 22% less than it was a decade ago.
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  • 72% of those are purchasing digital services to support those channels, spending far more on those efforts than on basic advertising.
  • By examining IRS tax records, Borrell concludes that “if businesses were devoting the same percentage of this year’s gross revenues to advertising as they were 10 years ago, the advertising economy would be $56 billion richer.”
  • Online media appeals to the largest percentage of local advertisers and takes the largest share of ad budgets of any other media. This is a pedestal newspapers have occupied for over 300 years! “Over the next 12 months, the gap will almost certainly widen to the point that all traditional advertising channels — print, broadcast, outdoor and mail — begin to look like niche support mechanisms to a local businesses’ digital marketing plan.”Screen Shot 2015-06-10 at 12.33.49 PM
  • Traditional media has devolved into an option, selected by habit or by preference but certainly not by necessity.
  • Online is so strong that by 2020, Borrell projects that all traditional media will scramble to maintain a small set of advertisers who will spend small shares of their budgets with them.
  • Local businesses, on average, get 20% of their sales from online, versus 13% by the old standby, the telephone.
  • These businesses have just begun to become digitally savvy, according to a new metric from Borrell. 85% of SMBs fell short of a line considered “very active” in digital activity. What this means is that they are novices that somebody can teach and that the more savvy they become, the more disruptive they’ll likely be.
  • 82% of respondents maintain a social media page with an average of 2,123 followers, though 61% have fewer than 1,000. The report notes that growing their own audience base equates to real customers for SMBs, which is radically different than buying ads based on somebody else’s reach.
  • Native advertising (a.k.a. Content Marketing) is another area of satisfaction for SMBs, although its use is low. This equates to a growth opportunity for those providing a service.
  • Mobile is another BIG area of interest, although not in any traditional advertising sense. The projected spending categories for mobile relate almost entirely to SMBs own web franchises and include things like Responsive Design (mobile‐friendly), search, SMS, proximity, apps and video.

With all Borrell research, it’s useful to take a step back and try to get a 30,000 foot view. What this report doesn’t say directly is that the levers of commerce in our world are shifting to the hands of businesses themselves due to the growth and development of a networked culture. The beauty (or evil, depending on your perspective) of the network is that it is a 3‐way communications medium, which allows human beings to by‐pass filters that the network deems inefficient and, frankly, now useless. This includes our entire cultural infrastructure of expertise divided into silos, the first of which is how we communicate. There will be others.

This Borrell report tracks empirically the shifts relating to the way money changes hands in the levers that grease of the skids used by businesses to reach customers and sell their wares. Those businesses are loudly telling us now — along with their customers — exactly how THEY want things done, and clearly that doesn’t include traditional forms of getting the word out. It’s too expensive. It’s too haphazard. It’s out of control in ways that we tend to disregard in the name of profit.

While I certainly respect the crisis that journalism may face in all of this, we’ve been our own worst enemies in the assumption that we could simply shift our model to the Web. It’s too late to effect any significant change in that strategic blunder, but it’s not too late to shift our focus to what we’re being given and away from what we want. That, I’m afraid, is the only logical path for the days, weeks, months and years ahead.

Meanwhile, Gordon Borrell will continue to apply his fascinating research to helping us understanding not only what’s going on today but also where that’s all headed.

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