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.

Self-Gifting Delusion

In late 2011 television news outlets signaled that paid newspaper circulation (total weekday and Sunday) was close to slipping below 40 million, a decline of 32% over two decades.

But less than 24 months later, those same outlets gave little notice when cable TV, now known as “legacy television subscription” slipped below that same threshold, having dropped more than 10% in less than three years alone.

When we cut the cord entirely in our house in 2010, television executives were arguing that the phenomenon was economic in nature, not the result of disruptive technology.

But by the end of 2011, 11% were considering doing so and a study in 2012 showed that 25% of legacy television subscribers planned to drop that service over the next five years.  Taking cord-shavers into account, the drop is becoming more precipitous than what hit newspapers.

Newspaper executives were astonished at the speed with which their business model was undercut by the Internet in the 1990s but not nearly in as much denial as landline telephone services were when the smartphone did the same to that technology less than a decade later.

It took less than a year after Netflix began streaming in 2007 for cord-cutting to move from fad to an accelerating trend.

Having good data is not an antidote for being delusional, nor is television the only industry in such gross denial.

In my former profession of community marketing, there are still far too many obsessed with visitor segments that have long been in decline such as conventions, pushing or enabling cities to build mega-facilities and then spending huge subsides on out of town groups that typically displace more tourism than they could ever create.

Evidence that this is a form of insanity has been available since the 1980s.  Similarly, community marketers and television executives often collude to subsidize huge sports events which also displace more economic impact than they create.

Corruption is rarely involved, unless it is lobbying, a form of legal corruption.  Just denial.

New media is at its worst when covering news media.  Listen in the build up to the Super Bowl as an example.  No it isn’t more popular than ever.

No the ads aren’t a turn on.  They turn off 1.2 viewers for every one viewer motivated to search for more info or buy something or feels made more aware.

The hugely expensive ads have a negative return.  So who is in denial?  Denial is a cooperative enabler and in this case, it includes the news media, advertising agencies, advertisers and about half of viewers.

One of the above is being ripped off,  But television may be the one being ripped off by convoluted data regarding the huge disruption now underway.  Instead of forewarning executives and stockholders to take significant action, it is full of mixed signals, in part, to desperately cling to the status quo.

All of this came to mind recently as I watched a presentation by arborists working for one of the nation’s largest utilities.  The presentation was quick to assign the costs of outages to trees but not to the fact that the utility lines should have been undergrounded decades ago.

The presentation was also clear that the lower lines running from pole to pole desecrating neighborhoods, home values and community scenic stature did not belong to the utility.

They belong to cable and land-line telephone companies and other utilities that are as obsolete as running the lines above ground.

It is the free market at its most irresponsible, unless you also factor in the obsolete use of coal to generate the power.

Free or freeloading?

These businesses are trapped in antiquated and unsustainable business models.  But waiting for them to adopt full-cost accounting or to write off stranded infrastructure is about as feasible as expecting lawmakers to see past the obfuscation created by billboard lobbyists, on behalf of another dead business model.

A new study indicates that nearly 6-in-10 shoppers in the US are self-gifters.  Maybe our only hope is to gift our communities the infrastructure to put these obsolete technologies underground.

We’re paying through the nose anyway.