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IAB’s Primer For ‘Local’ And ‘Location’ Ad Sales Shows National Spenders Gaining

National marketers and local SMBs are neck-and-neck when it comes to the amount spent on targeting local audiences, as both make comprise a separate 36 percent slice each of the market.

IAB's Joe Laszlo
IAB’s Joe Laszlo

National brands will continue to boost their local digital investments, especially focusing on omnichannel online and offline solutions, says the Interactive Advertising Bureau’s just-published Local Buyer’s Guide.

The IAB’s overview of  local ad spending, authored by Joe Laszlo, senior director of the organization’s Mobile Marketing Center of Excellence, adapts the environmental activist dictum of “Think globally, act locally” to describe the way most brands should think about online audiences and interactive marketing campaigns. (See the press release.)

As the IAB has attempted to drive standards for the use of geo-data in order to promote clarity about the varying levels of signal quality and mobile targeting capabilities, this latest message to its members is designed to impart greater knowledge of the tools and trends shaping the media buying and ad sales decisions.

Location Isn’t Just About Local

For example, in answer to the question of “Who Is Buying Local?” the IAB’s report notes that most would assume that local businesses are the main buyers of locally-targeted advertising. But the fact is that national marketers and local SMBs each account for about 36 percent of spending targeting local audiences. (The remaining 28 percent of spending is from larger local businesses.)

“We expect these spending trends among SMBs, Local Non-SMB and National advertisers targeting local audiences to remain about the same through 2019,” the IAB says.

Mark Marinacci, chief category officer of Tegna’s Cofactor (the Gannett digital unit that represents the merged Shoplocal and PointRoll entities), tells the IAB that, “organizations selling through multiple online and offline channels like brands, retailers and consumer packaged goods, are starting to understand that declining sales in their traditional channels are getting more pronounced and they need to add digital solutions to make up for the shortfall.”

As consumers rely more on their portable devices to give them immediate discovery of products and services near them — those “micro-moments” that Google and others have seized on as a marketing directive — simply targeting consumers based on where they happen is something the industry still needs to get beyond.

“The consumer lives locally, but local is more than a location,” Marinacci argues. “Local is a statement about who you are. Local becomes part of the consumer’s identity.”

The Changing Marketing Mix

Focusing on “contextual signals around consumer locations” is the key to making the right connection between ads and the desired consumers.

“The most successful campaigns for omnichannel marketers will find ways to blend the consumers’ offline and online experiences in compelling ways,” Marinacci adds. In other words, consider the mindset, since the same person is more open to different kinds of creative across different days, times, and channels.

All these changes in consumer focus are a reaction to the trend of local and national advertisers buying local digital inventory amid a wider changes driven in the mix of spending on mobile channels.

For example, in 2014, about $900 million — or, roughly 21 percent of the total spend in mobile targeting local audiences — came from local advertisers. By 2019, total spend by local advertisers will grow to $6.5 billion or about 36 percent of the total spend in mobile targeting local audiences. Clearly, the mobile channel is becoming increasingly important to local advertisers over time.

Looking at SMBs, it becomes clear that some business categories have more thoroughly embraced digital advertising than others. In a BIA/Kelsey survey, just 27.7 percent of the total ad budgets for Home/Trade Services companies are spent in digital. However, Retail SMBs spend 43 percent of their budgets in digital.

While most marketers don’t need to be convinced that cross-screen marketing and looking past the silos of specific media channels are things of the past, it helps to have research to back it up.

For example, YP has found that 73 percent of searchers on its service switch devices to complete their local business search. This compares to 63 percent of searchers across all search providers, still a large number.

“We know local searchers use different devices to suit their needs when completing their shopping journey,” the IAB quotes Heather Sears, VP of YP Marketing Solutions, as saying. “Our comScore research disclosed that while the PC is consistently the most used device across all phases of local search, smartphones and tablets are used more frequently and allow for continuous engagement while on-the-go.”

Ultimately, advertisers are being called on need to become better at designing and improving campaign elements suited to each screen at different points in the campaign and determine the relevant metrics and KPIs.

And of course, PCs and smartphones don’t exist in a vacuum. Television has long been a key local medium. But as TV’s grow smarter and the interactive services become more advanced, they too play a role in delivering digital, locally relevant messages to customers.

Digital TV systems are delivering increasing capabilities around targeting to specific zones within a DMA. A number of technical solutions now exist that help to ensure relevant messages are delivered across all screens, and indeed it’s easy to imagine, for example, an automotive campaign where a local dealer’s ad is complemented by a simultaneous mobile ad featuring a map to that dealer and a one- click means to make an appointment for a test drive.

Bridging The Nat-Lo Divide

National marketers will be spending increasing amounts of money in locally targeted advertising over the next 2-3 years. Robb Richter, Media General’s chief digital officer, emphasizes that “the greatest opportunity will be for national brands with local footprints to better control and optimize brand messaging.”

“The benefits of technology will yield two results,” Richter tells the IAB. “One will be the opportunity for national advertisers to scale down to local markets with more bottom of the funnel KPIs. Second, at the same time they will be able to amplify local success, scaling to national scope.”

One of the struggles “mobile-first” companies and advocates have been wrestling with the last few years is whether smartphone and portable device screens deserve special primacy when campaigns or being crafted, or whether mobile apps and the mobile web serve as the hub for larger efforts.

As the roles of social and search continue to intersect and offer more opportunities beyond display and traditional advertising, the “mobile-hub” model appears to be the general method that will define most advertising, particularly when it comes to tying together national and local; display and search; and earned and paid media.

Elina Greenstein, who runs channel partnerships for location marketplace xAd says that mobile digital inventory can be used to amplify local buys in easy, streamlined and scalable ways via programmatic platforms and location-based data that allow national marketers to use automated platforms and workflow to execute at scale.

“Many marketers will determine their media spend and split strategies for local marketing at the planning level,” Greenstein says in the IAB’s report. “But while marketers may buy billboards, radio, TV or other media as well as mobile, “they often do not see how location-specific mobile inventory can extend and amplify the consumer’s journey to purchase. It comes down to the interface in brand versus direct response goals in local digital marketing and how the campaign elements are designed to work together.”

About The Author
David Kaplan David Kaplan @davidakaplan

A New York City-based journalist for over 20 years, David Kaplan is managing editor of GeoMarketing.com. A former editor and reporter at AdExchanger, paidContent, Adweek and MediaPost.