Opinions

The (Hyper-Local) Future of Advertising

Posted by Matt Murphy on November 30th, 2012 at 9:43 am

Until recently, large national advertising agencies had an almost insurmountable advantage over their mid-sized and smaller counterparts thanks to economies of scale in large-scale media buying. Expanding companies that were looking to increase market share turned to big advertising agencies because they could access large-scale media buys more affordably. This was the prevalent trend in advertising for decades. Under that model, a company that started small might use local advertising agencies to craft and manage campaigns for their regional outreach, but as the organization grew and set its sights on a national audience, it would typically form relationships with larger advertisers to achieve broader reach.

The proliferation of data generated by online activities at home, at work and on the go has given rise to a new trend in advertising: hyper-localization. With hundreds of millions of consumers now using home or work-based desktops and laptops as well as mobile devices to access the web, advertisers can now reach people anytime, anywhere. And thanks to apps that deliver reviews and other information on local goods and services, consumers are increasingly likely to voluntarily share their location information to receive relevant, targeted information.

But not every company has been able to leverage this valuable data and new technologies to their advantage: Many are data rich but information poor, meaning they don’t effectively use the data they have to deliver more relevant, timely messages to potential customers. They allow an extremely valuable commodity – data – to be rendered valueless through inaction.

Consumers Demand Smarter Messaging

Companies that operate more nimbly and leverage data and technology effectively have a built-in advantage with consumers, who have come to expect messaging that is more relevant and timely. Because they are bombarded with ads across multiple channels, consumers have shorter attention spans. That means advertisers must find a new way to cut through the clutter to deliver messages that resonate with potential customers. Hyper-local advertising is the answer, and it can be delivered most efficiently and effectively by agile firms that understand technology and know-how to deliver integrated, large-scale campaigns that include traditional media and digital channel outreach.

The trend toward hyper-local advertising doesn’t mean that large clients need to scale back their attempts to engage potential customers nationwide. It means they should consider a more targeted approach, a strategy that is suited for each region. Companies that are growing market share nationwide are already taking advantage of the hyper-localization trend, tailoring national campaigns to fit regional sensibilities by incorporating city landmarks, references to area sports teams and other local color to grab consumer attention.

Cutting through the Clutter Cost Effectively with Localized Strategies

The factor that gave large national advertising agencies a key advantage for decades was that they could make large-scale media purchases on behalf of their clients more affordably than mid-sized and smaller agencies. The new hyper-localization trend has turned that on its head with a new cost factor: technology that makes affordable digital advertising and a more agile application of traditional advertising tools possible.

Under the old rules, a hyper-local campaign rolled out on a national level would be cost prohibitive, but today, advertisers can leverage new technology and digital channels to create and distribute messages that resonate with target markets, using traditional advertising techniques as well as digital marketing platforms. Advertisers can segment target audiences to ZIP-code levels, build customizable creative for local components of national campaigns and use digital and traditional advertising channels to distribute hyper-local ads and generate market share gains across multiple regions. A hybrid approach that incorporates traditional and digital channels to deliver hyper-local ads also provides another important advantage: automated reporting. This enables advertisers to measure impact in real time to demonstrate ROI.

Going Hyper-Local with Smarter, More Agile Partners

The new hyper-localization trend offers smarter, more nimble advertising agencies an unprecedented opportunity: Large national firms used to have a virtual lock on relationships with clients seeking a coast-to-coast campaign strategy by virtue of the big advertisers’ media buying price point advantage. Now mid-sized and smaller firms can leverage technology to build smarter, more customizable campaigns, blending traditional marketing collateral with digital outreach to deliver relevant, compelling messages that drive ROI.

As more clients discover the competitive edge that comes with greater audience segmentation and relevant messaging, mid-sized and smaller firms with broad regional knowledge and full-service advertising capabilities that include digital expertise can gain a clear advantage over their larger counterparts. Agencies that can demonstrate their unique skills and agile capabilities are poised to increase their share of advertising spend.

4 Responses to “The (Hyper-Local) Future of Advertising”

  1. Anne Smith says:

    I think it´s true that focussed marketing works best! However traditional means such as promotional items are still by far the most effective in terms of brand-recognition and price-value relationship. Brand recognition for digital adverts is particularly low since it is a highly congested arena.

  2. Nice perspective and a great description of the situation. When we were still an MBA research project we were surprised to hear the common refrain from ad agencies that they, "hate media buying" and by extension didn't embrace local because it was so fragmented.

    We created Locable to solve this by bringing local properties together to simplify national buys - both online and in print as our local partners are magazines with longstanding track records in their community's.

    It's interesting to see the ways in which different brands and businesses are interested in engaging local consumers with a targeted message, offer, contest, etc. Fun times if not still a bit of the wild-west.

  3. Michael Kern says:

    Digital marketing originally leveled the playing field between the marketing giants and small firms. It took awhile for large national companies to begin utilizing data, whether in house data or that made available through tools like Google Analytics to target specific geographies.

    Now with people logging in all over the place with their Facebook profile and Google tracking everything a logged in user does, looks at, or is interested in, along with knowing how old they are, where they went to school and more. Giant marketing firms that can afford this information can put a bullseye on the consumers forehead, whether they are in Boston or Singapore. This leaves smaller firms left playing pin the tail on the donkey, or targeting smaller businesses that can't afford these large marketing companies.

  4. We are in total agreement and that is why we hav invested in a hyper-local platform in the five boroughs of New York City. Having focused on internal expansion, our strretmessages.com has focused on providuing a competitive platform stretched throughout NYC affording large and smaller companies a model to build their out of home avertising campaigns throughout the breadth of city, while providing an ability to launch a targeted approach.

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