local media insider

Preparing for 2014? Here's what local merchants are planning

The battle for digital agency of record will be fought next year


The fight for agency of record status is underway. At the 2013 Digital Agency Summit, the team from BIA/Kelsey used statistics to frame the story of what local merchants will buy and what they want from media in 2014: 

1. Merchants will spend more, but on non-traditional marketing.

While spending intention on marketing is showing an increase 4.5% next year, from an average of $4300 to $5200 in spending per local merchant, most of the growth will be from non-advertising sources. Media with digital services agencies are better positioned to capitalize.

2. The largest growth  will be in local mobile and video spending.  

Search marketing  already commands 50% of local ad spending and will grow $6 billion to 8.6% 2017, an annual growth of 7.3%.

That's sounds impressive, until you consider mobile and video percentage growth. 

Local mobile spending, according to Kelsey's intention survy, will experience 50% per year increases  and video will increase by  35% on average through 2017. 

That means merchants will also be spending to mobilize sites, create video, YouTube channels, and gain an edge on search marketing. Digital agencies equipped to provide these services will have a "foot in the door" advantage by selling what merchants plan to buy. 

3. Local marketers will spend in fewer channels. 

Perhaps the most important new trend is merchants are spending more in fewer channels, in spite of increased audience fragmentation caused by the proliferation of channel choices.

For example, the average local merchant used an average of 7.2 channels this year -  down from 8.7 channels in 2012. So what does this mean? 

"This is the first time we've seen the trend reverse itself," said Rick Ducey, Managing Directory of BIA/Kelsey. "This is the result of an increased focus on ROI, rather than experimentation with new channels." 

4. Merchants will invest in marketing programs that have a measureable ROI, and cut those that do not.

“The very proliferation of channel choice and fragmentation has created greater demand for ROI," Ducey said.

“Whatever is not delivering trackable, measurable return, is beginning to get phased out, in favor of channels that do."

The sorting out process is another role for media company's inhouse agencies, but also a warning:  Media campaigns that do not channel audiences into customer acquisition programs are at risk. This does not always mean Google AdWords spends, but it does mean adding offers, phone call tracking, email acquisition, contests, appointment setting and other mechanisms that verify the investment was worthwhile. 

"The new role for media job to “create clarity and peace of mind."

Editor's note: It's past due time to start tracking negative momentum in the spend of large accounts, the first sign that they are shifting budgets.  Require a digital calls with a high level digital expert of manager to review current digital needs. In fact, all large accounts should have a digital review. 

5. Newspaper advertisers are prime targets for digital agencies

Newspaper advertisers over-index in purchases of digital services, including all the top channels: Facebook, email, Google, Twitter and YouTube.

For example, where Facebook has 51 to 52 % share of usage by local merchants, the penetration by newspaper advertisers is 64%.

The implication for newspapers is that their advertisers are in the game, will be making larger digital buys higher up the food chain (driving audiences to digital programs), and are receptive to digital marketing.

"They are not playing catch up, they are ahead… and if you are not having the conversation with them, you are slipping farther and further behind.”

However, print newspapers also ranked 38th of 41  media channels surveyed in merchant perception about their strength in producing measurable ROI, their most important criteria for spending on marketing. This creates both risk and opportunity for print companies. 

6. SMB’s need integrated programs.

SMB's in the survey said they are not happy the social integration of their brand (68%), consistent look across formats (54%), and, most stunningly, ability to remarket to their own database of leads (87%).

“It’s overall a jagged story," said , but also supplies an opportunity for services that can integrate customer acquisition programs," Ducey said.  

Bundles that integrate the data and simplify integrated leads acquisition will meet this need. Editor's note: For larger clients, create larger bundles that are category specific, and are designed around channels that those categories perceive has the highest ROI. Include legacy media to drive  audiences to the offers that capture sales and contests that capture leads. 

9.  Local merchants are willing to pay a third party for services.

More than 50% of SMB's say will use a third party vendor, and are willing to pay a third party to provide a suite of solutions.

What else do they want? Bundles of services; "they don’t want to deal with vendor clutter."  Coordinated products so that program integration makes sense. A single point of contact in sales and customer support.

FYI, while most are planning to cut print, two-thirds also say that their print representative is still highly valued - another plus side on using legacy reps to sell agency services. Editor's note: Allowing your legacy teams to sell agency services does not exclude hiring separate teams to prospect non-traditional advertisers. There are a variety of compensation and organizational mechanisms in LocalMediaInsider case studies that show how to achieve winning combinations. 

10. Give them leads.

They type of leads local merchants want are concrete: e-mail from online forms, phone calls and walk-ins. Click through rates are not considered conversions on their own.

"If you can do these things well, you will succed" at digital sales, Ducey said. In fact, "it is the imperative."

Many thanks to the team from BIA/Kelsey: Rick Ducey, General Manager, Charles Laughlin, SVP and Managing Editor and  Jed Williams, Vice President Consulting and Senior Analyst and LocalMediaAssociation the co-founder of the LocalAGency Summit. For a variety of approaches to selling Digital Agency Services see these case studies: Cincinnati's  Social Media Agency created by Hubbard Radio;   How WBOC TV used digital services to gain top rank in market share  and DMNMedia Connect's use of targeting to sell larger campaigns and Content Marketing at the SFChronicle. 


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