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‘Location-Aware’ Advertising Continues To Rise As Many Big Local Spenders Hold Steady

For the first time in two years, advertisers we classify as 'plus spenders,' - those spending more than $25,000 each year on advertising - are not planning to increase their ad spend in 2018," says Celine Matthiessen, VP Analytics and Insights, BIA/Kelsey.

As SMBs continue to reduce spending on broadcast and cable, “big spenders” in that category — those with $25k-plus in annual ad expenditures — are rushing to embrace “location-aware” based marketing for the promise of more precise targeting at a relatively lower cost.

According to BIA/Kelsey’s latest Local Commerce Monitor report, the rate of growth in digital spending will remain relatively flat between 2016 and 2017.

Meanwhile, half of higher spending SMBs plan to maintain their current ad spend in 2018.  According to BIA/Kelsey, half of higher-spending local businesses intend to devote 62.2 percent of their budget to digital media to promote their businesses, an increase of six percent from 2015.

“For the first time in two years, advertisers we classify as ‘plus spenders,’ – those spending more than $25,000 each year on advertising – are not planning to increase their ad spend in 2018,” says Celine Matthiessen, VP Analytics and Insights, BIA/Kelsey. “Instead, they are increasing their use of lower cost digital media to maintain spend.”

The report amplifies findings that BIA/Kelsey pointed to this past summer, when the local marketing researcher noted that trends of past years have become fully ingrained in marketers’ spending patterns, as online/digital is projected to grow at 13.5 percent, from $44.2 billion in 2016 to $50.2 billion in 2017.

In comparison, traditional print and broadcast will combine for a decrease of 2.4 percent, falling from $101.1 billion in 2016 to $98.6 billion in 2017.

Overall, total local ad dollars in the U.S. to reach $148.8 billion in 2017, up from $145.2 billion this year, representing a growth rate of 2.4 percent.

The marketing share of those larger SMB local spenders is rapidly evolving to include less expensive advertising channels like digital, social and mobile that are capable of targeting customers. For 2018, sponsorship/giveaway and mobile channels are both projected to increase in usage while broadcast and cable will show the biggest declines.

Within mobile, location-aware advertising is showing the most growth, perhaps because of its perceived benefit. Nearly half of respondents who use location-aware mobile advertising gave it an ROI of excellent (10-19x) or extraordinary (20x).

Local search on desktop devices will grow at a 5.7 percent CAGR, BIA/Kelsey said this summer. As more search activity takes place on mobile devices, mobile is cannibalizing search dollars from desktop.

As the use of Connected Intelligence and the Knowledge Graph via voice-activated assistants like Amazon’s Alexa, Okay Google, Apple’s Siri, Microsoft’s Cortana continue to make the move into the mainstream, local search is only going to undergo greater upheaval. The changes wrought by mobile versus desktop will be mirrored by the shift from screen to speaking.

“A range of factors will drive local ad revenues higher in 2017 and through the end of the next year,” Mark Fratrik, SVP and chief economist at BIA/Kelsey, told GeoMarketing previously. “An improving U.S. economy, increased spending by national brands in local media channels, extraordinary growth in mobile and social advertising, and the continued expansion and selection of online/digital advertising platforms. In fact, we are predicting that online/digital local ad share will exceed the share of print media by 2018.”

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.