Monday, August 17, 2015

Small Business and The Golden Age of Geomarketing

A new survey of small and medium sized business advertisers (SMBs) across the nation by Borrell includes a list of “paid” media they favor for those who still use that element of marketing.

It helps to understand that 72% of these SMBs have fewer than 50 employees and 48% have fewer than 10.  Nearly three-out-of-four are independently owned.

The paid media they favor, in this order, are digital, newspapers, local magazines, direct mail and radio.  Mobile falls sixth.

If you throw in all outdoor advertising including buses and kiosks, only 17% still bother with billboards which along roadsides are viewed as blight by 8-out-of-10 Americans.

Taking only true small businesses into account, another report shows that only 3% of small businesses now use billboards confirming they can do the math of the turn-off-to-turn-on ratio.

More than 80% of SMBs have established their own media channels in the form of a website and social media page.

Interestingly, the analysis found that 72% are now spending far more on digital services to support their websites and social media pages than they do on basic or traditional advertising.

Borrell concludes that we are at the “end of the Golden Age of Advertising” and witnessing “the dawn of the Golden Age of Geomarketing.”

According to the report, local digital marketing is responsible now for virtually all of the growth in local advertising.  Borrell defines local ad spending as dollars spent within the market to reach people within the market.

But geomarketing is now getting far more specific than the huge, sprawling, multi-county media markets devised by traditional media to optimize what they could charge advertisers by hoodwinking them into believing that consumers would commute hours away for what they could easily buy local in the truly local sense.

That’s what makes the findings of the report even more relevant.  That’s because geomarketing puts the local back in local, meaning the local business climate.

In 2013, Borrell forecast the zoom in online advertising with traditional media rather stable.  But the company’s 2015 survey reveals an even more rapid transition to online.

In reality, longitudinal research at USC’s Marshall School of Business pinpointed that this paradigm began to shift three decades ago and by 2010 , traditional advertising for businesses overall had reached a negative return on investment.

It is clear from many who analyze this rapid decline that the advent of digital and the Internet didn’t kill advertising greedy advertisers and traditional advertising mediums did.

Advertising as an element of marketing is essentially a form of “yelling” for attention.  Yelling annoys consumers even when they are viewed as entertainment or diversion as they are by 77% of viewers during the Super Bowl.

Ads during the game have a substantial turn-off ratio among viewers.  According to post game surveys, nearly 4 people were turned off by the ads during the 2015 event for every one who was influenced to actually buy something.

FYI, turned-off includes those who were bothered or viewed them as interrupting the game or making it last too long or felt the advertisers should have saved their money and passed the savings along to consumers instead.

Even if only awareness generated by the advertisers is measured, the turn-of-to-turn-on ratio barely reaches break even, hardly a metric worth shelling out $4.5 million for a 30-second spot.

Many “yup yup yup uh huh uh huh” marketers fail to grasp that traditional advertising can actually be counterproductive.  But savvy execs understand this is a fatal flaw, especially when the cost comes to $3 a viewer, double that when netting out those who were annoyed.

But then again, maybe stockholders should view these as an incredibly expensive way to stroke egos.

The shift to digital continues to have so much momentum that analysts at Borrell forecast that traditional media will soon begin to be used, if at all, more like “niche support mechanisms to a digital marketing plan.”

Full research reports and analyses are available from the Borrell website.

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