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National Advertisers Increase Local Ad Spending

By | 07.23.14

National Advertisers Increase Local Ad Spending

National advertisers are beginning to become more involved in local marketing in the United States, a very competitive marketing venue. In fact, specific geographic advertising and increased spending in specific local markets is taking place to secure buyers in certain areas, notes BIA Kelsey.

Although national advertisers are increasing local media spending—local radio, television, and online properties—they do continue advertising on national networks, such as NBC and ESPN, according to Mark Fratrik.

BIA Kelsey expects national advertising spending to increase locally from its $50.2 billion in 2013 to 68.9 billion in 2018, which means this spending will be growing at a 6.5 percent compounded annual growth rate. A key growth driver is mobile advertising. Local advertisers will continue to grow; however, national advertisers will account for most—70 percent—of mobile advertising in 2018, or over $11 billion in spending on advertising. The same will be seen in online advertising, which will be generated by national advertisers for a $20.8 billion spend in 2018. Yet, advertisers, in general, still seek ways to maintain existing consumers and drive potential business. Increasing local media efforts by national advertisers is one way of accomplishing that, according to BIA Kelsey.

Meanwhile, Michael Boland predicted last year that “local is where the action is.” At that time, Boland was preparing to moderate a panel entitled “Big Brands Go Local” at the New York Street Fight Summit. According to Boland, mobile and local are inherently collaborative based on the portability of mobile and its location awareness, which prompts more local content targeting. So-called “native advertising” urges campaigns that are in line with the form factor, including localized ad placement, calls to action, and creative, which are all developed to boost local relevance.

This is seen in television and other media, in which large sections of local ad spending are taken by national brands that purchase geographically specific advertising inventory, explains Boland, a practice known as the national-local spend. This is now being seen in mobile. “The projected growth in mobile local ad spending is mostly to come from national advertisers that localize campaigns. Eventually, we’ll also see a similar shift to SMBs” (small and medium business), which took place in the past 11 years on the desktop.

Boland predicted what we are seeing today, that while most mobile ad spend is handled by the national players, they are “slowly but surely evolving to deal with the realities of mobile (read: local).“ At that time, mobile exchange, Nexage. reported a 30 percent growth in demand—a five-fold increase—in CPMs (cost per mile, or advertising based on impression), for location-targeted ads.

Although Boland predicated that the move to local would be a large departure from national advertisers’ “comfort blankets of desktop tactics,” such as IP targeting, national advertisers would recognize the importance of utilizing location targeting in their mobile advertising sooner rather than later.

References:

BIA Kelsey; National Advertisers Spending in Local Markets; By Mark Fratrik; May 6, 2014.

Street Fight; National Advertisers: Time to Get Local; by Michael Boland; January 14, 2013.

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