Local Marketing Landscape Published by The Local Marketing & Advertising Bureau (LMAB) Fourth Quarter, 2007
Abstract: Local marketing is the fastest growing yet least understood aspect of marketing. This document provides a summary of the local marketing landscape, particularly useful for brands and advertising agencies seeking to make sense of the fragmented local marketing efforts within large organizations.
Author: Jonathan Walsh
This document is furnished exclusively for the Local Marketing & Advertising Bureau and its membership. All rights reserved.
Why Does Local Marketing Benefit Brands? With the growth of the Internet and media fragmentation in this decade, one truism of business has remained constant – over 98% of all transactions are either transacted or impacted by local businesses. For this reason local marketing continues to grow, with more accelerated growth than any one media type including the Internet. Local marketing will account for $220 billion in spending in 2007 across 32-38 million local businesses (Local Ad World). The second truism of local businesses is that they are in some way affiliated with a Brand, either as a local entity operating under that brand or as a retailer selling products or services of a brand. These two facts create unique opportunities for brands to support and take advantage of local marketing efforts for maximum impact on brand building and sales at a local level. Brands that are on the leading edge of marketing are staying there by properly managing their local marketing just as they would their national or regional marketing. Brands that are effectively managing this sector of their marketing are seeing increases in consumer traffic to both retail locations and websites which is resulting in steady increases in sales year after year. With increasing competition in all vertical industries, local marketing is becoming a necessity instead of a possibility.
Branded Branches vs. Co-operative Sellers There are two major categorizations of local marketers: branded branches and cooperative sellers. Combined these two categories account for up to 98% of local marketing yearly. The largest percentage of local marketing expenditure (estimated 6065%) is performed by branded branches - any business operating under the controls of a brand and marketing the products of a brand. The table below illustrates the different types as well as examples of each category: Type Local Stores of Retail Corporations
• • • • • • • • • • • • •
Examples Home Depot store in Port Chester, NY Office Depot store in Palm Beach, FL Wal-Mart store in Greenville, NC Best Buy store in Atlanta, GA McDonald's restaurant in Grand Junction, CO Subway restaurant in Marshall, TX Chrysler Dealership in Dover, DE Century 21 real estate agent in Phoenix, AZ AllState agent in Nacogdoches, TX Edward Jones financial advisor in Deerfield, IL Bank of America branch in St. Louis, MO AT&T direct sales office in Trenton, NJ Charles Schwab investment center in Austin, TX
Franchisees of Franchisors
Agents of a Larger Corporation Owned and Operated Branches of Service Businesses
- 1 - Local Marketing Landscape | The Local Marketing & Advertising Bureau
Service Operators or Representatives
• • • • • • • • • •
Roto Rooter Plumber in Macon, GA Weatherguard installer in Middletown, OH Teleflorist location in Lufkin, TX Dell's Southwest Region Marketing Division AARP's Wisconsin branch United States Air Force Texas Recruitment Division Sprint’s Northeast Region Marketing Division Chrysler Tri-State Dealer Advertising Association McDonald's Manhattan Marketing Co-op Austin Red Cross Society
Regional Marketing Departments
Associations or Marketing Groups
Branded branches are part of a brand which guarantees business through the association of the brand. These branded branches account for about 60-65% of local and regional advertising because they are required to spend a predefined portion of their revenue on advertising. A portion or all of this spending may be subsidized by the brand - for example AT&T spending a portion of its national advertising budget on localized newspaper advertising. Branded branch marketing involves utilizing brand components (campaigns, product imagery, recommended copy) from a head office, and tailoring materials with local offers and selecting relevant messages. Typically branded branch marketing has complex procedures involving the required tie-in of legal to local offers, local customization and brand elements. Co-operative sellers are any local business operating independently while selling branded goods. Co-operative sellers receive co-op marketing funds from these brands to support their local marketing, and represent 30-35% of local marketing expenditure. Examples include: Type Brokers Selling Competitive Branded Products Value-Add Resellers Retailers Selling Competitive Branded Products Retail Locations Selling a Variety of Branded Products
•
Examples A Chicago, IL insurance broker selling both AIG and Chubb insurance products
•
A New York, NY based Microsoft Certified Partners providing systems integration of Microsoft products An Elizabeth, NC based wireless store selling Cingular, Verizon, Sprint & T-mobile phones a Longview, TX electronics store selling Sony and Samsung products A deli in Minneapolis, MN selling Pepsi and Coca-Cola beverages, Boar's Head meats, and Frito-Lay snacks
• •
•
- 2 - Local Marketing Landscape | The Local Marketing & Advertising Bureau
Co-operative marketing is often even more complex than branded branch marketing, as in addition to utilizing brand components with local offers and local messages, there are even stricter legal approvals required for the local marketing, and there is an additional requirement of funds management for a partial or whole subsidization of the marketing by brands based on meeting specific criteria such as brand compliance or sales levels.
What Are the Local Marketers’ Objectives? Local marketers have very specific objectives when it comes to local marketing: • Increase Consumer Loyalty Consumer loyalty is becoming harder and harder to come by with the large amount of competition in every industry. Consumers prefer to make a majority of their purchases based on the distance and time it takes them to complete their transactions. By including information such as store location and hours, consumers will be able to appropriately associate with that location before going somewhere else. Impacting Local Sales Increasing sales is directly related to consumer traffic. In order to create increased consumer traffic, local marketers must have high quality advertisements at their disposal. Using brand related materials, organized guidelines and local information has been proven to impact local sales positively at a local level. Saving on Costs Creating local marketing can range in cost and quality depending on budgets. Local marketers are looking to get the best quality advertisements for the lowest cost. By having brand resources available to them, local marketers can ensure the most bang for the buck. Saving Time Local marketers do not want to waste time creating advertisements when there are solely focused on the consumer but they want to be able to be the first to market or be able to respond to competitors as quickly as possible. By having a local marketing tool in place, local marketers can save time, which will allow them to address these other important business needs including productivity and consumer service. Reduce Effort Being able to create advertisements quickly and easily would allow local marketers to be able to have speed to market unlike any of their competitors. Being able to match pricing, promote upcoming events or specials before competition has proven results in more traffic into store locations and websites.
•
•
•
•
- 3 - Local Marketing Landscape | The Local Marketing & Advertising Bureau
What Are the Brands’ Objectives? On top of the objectives of the local marketers, brands have more focused objectives to meet when they create local marketing: • Gain Local Market Insight Brands can gain tremendous insight into how, when, and what consumers are spending their money on through local marketing. Local specials, promotions or events give brands knowledge of their consumer base unlike any other form of reporting available. Optimize Every Single Advertisement Brands want complete efficiency out of each and every advertisement that they create. Through local insight gathered from previous marketing materials, brands can create ads that target specific needs in the local markets that can not be done through national or regional marketing. This allows for controlled content, and increased brand loyalty. Gain a Competitive Edge Speed to market is critical when it comes to gaining a competitive edge. Whether it is being able to get something out first or responding quickly to competition, brands are all looking to gain that edge. Having a tool in place that allows flexible customization of creative and marketing materials is what all brands are now searching for. Control Brand Guidelines Brands that have better control of guidelines tend to see higher returns then those who vary from them. By being able to offer brand content down to the local level, brands see increased response to their marketing of about four times greater than when they are not.
•
•
•
Local Marketing Across Different Forms of Media Local marketers have access to a multitude of media types. While historically viewing these media types as “one-offs”, the better local marketers, with the support of their brands, now take a campaign focus, incorporating multiple of these media types into a consistent campaign focused on making an immediate impact on sales for the local business. Common local marketing media types include: • Newspaper / Magazine By using newspapers and magazines to run ads, local marketers are able to get across to their consumers specials, promotions, and events with local store information such as address, telephone number and store hours. Online Advertising Allows local markets to promote specific products, offers, services or promotions to potential clients based on their location while using the internet. Website Local landing pages for stores allow consumers to find out what is happening in their specific market instead of the national website set up by the brand.
•
•
- 4 - Local Marketing Landscape | The Local Marketing & Advertising Bureau
•
E-mail Local markets have specific emails created in order to help promote specific products, offers, promotions, services or events to local consumers, increasing consumer loyalty. Free-Standing Inserts Local marketers can add customized free-standing inserts into local papers creating consumer awareness to specific locations, increasing consumer loyalty. Point of Sale/In-Store Materials Local marketer that take advantage of creating localized point of sale and instore materials see a greater response from impulse purchases. Plasma Screens (In-Store Managed) Local marketers utilize their in-store plasma screens to help promote up to the minute price changes, new products, offers, services and events to consumers that are in-store. Direct Mail Local marketers take advantage of being able to directly connect with consumers through mailing lists, updating them on services, new products, upcoming promotions, and store news. TV/VOD Local Marketers create their own TV/VOD advertisements in order to help market their current products, offers, promotions service, and events that include local information and brand content. Radio Local Marketers create their own radio spots to market their current products, offers, promotions service, and events that include local information and brand content. Outdoor/Out-of-Home By having the ability to locally advertise information such as store addresses and hours to a large number of consumers, out-of-home allows local marketers to target these consumers who may normally not be consumers with them. Alternative Media Local gas stations and grocery stores are popping up with in-store TV networks that allow local marketers to advertise in their local stores.
•
•
•
•
•
•
•
•
As well, business materials should be created for internal use that would directly complement the local advertising being created for the local retail locations. • Business Cards Local marketers create business cards for employees that use the same brand materials as the advertisements use. This allows for consistency and grows relationships with consumers after they have left the store.
- 5 - Local Marketing Landscape | The Local Marketing & Advertising Bureau
•
Stationery Brands help control consistency by offering local marketers branded stationary. Consistent brand stationery helps consumer see the brand as professional, creating a feeling of necessity to work with them. Brochures/Pamphlets In-house created brochures and pamphlets act as in-store advertising. Adding local information to the brochures and pamphlets helps ensure that consumers who leave your store will return when they are ready to make a purchase. Leave Behinds When visiting potential consumers, brand consistent leave behinds leave an impression of professionalism, and well as have a local touch that helps potential consumers relate directly to your brand. Merchandise Local marketers create brand merchandise such as t-shirts, hats, coffee mugs, etc to either sell or hand out to consumers that contain localized store specific information to help market their locations to other consumers. PowerPoint/Presentations Brands provide local marketers brand consistent PowerPoint and presentation materials that allow them to better market the brand when going out on sales calls. Now Hiring Materials Local marketers gain higher response rates and an increased number of qualified candidates when they promote employment opportunities with brand consistency and localized information such as manager name, store photo, and location. Kiosk Local marketers utilize their in-store kiosks to help promote upcoming events, new product launches, and special offers to consumers who are in-store.
•
•
•
•
•
•
Ways to Market Locally through Campaigns There are a variety of different ways that local marketers can create marketing around different aspects of their business. Brands that are supporting local marketing make campaigns around these types of programs available for the local marketers to utilize. • Events In local newspapers, TV and radio stations, emails to selected mailings lists and localized websites local marketers can spread the word quickly and efficiently about upcoming private, annual, semi-annual and special events. As well the creation of brand consistent point of sale and in-store materials can be created to complement the other marketing materials. Promotions Well crafted localize marketing efficiently helps advertise current or upcoming promotions. Promotional days draw almost two times the amount of consumer traffic then a non-promotional day. Email lists, newspaper ads, and TV spots effectively spread the word on promotions.
•
- 6 - Local Marketing Landscape | The Local Marketing & Advertising Bureau
•
Featured Offer or Offers Marketing can center on any offer or offers that local marketers or their brands wish to feature. All forms of media can help expand consumer knowledge of what your brand is offering, allowing for increase brand recognition and retailer locations. Services Services such as extended warranties or repairs can be the focal point of localized brand marketing. This will help consumer awareness of services that your local entities provide that will distinguish your local entities apart from competitors. In-store materials, web or email materials and even traditional media can all help create more awareness for services provided. Programs Programs such as consumer rewards, or price guarantees can also be the focal point of your marketing to how differentiate your brand and local entities from your competition. Creation of both in-store and traditional marketing with local information can help promote these programs to local consumers. Locations Marketing can be focused around retail locations, creating consumer awareness. Consumers that are able to quantify distance to retail locations tend to shop at those retailers before retailers that they are unsure of the distance to. Marketing with maps, store hours, address, and store photos lead to more consumer traffic and an increase in sales. People Marketing can be focused around employees, management, or corporate team members that will help future along relationships with your consumers. In-store brochures and other collateral are created for employees to handout to consumers that include things like name, position, contact information, etc to help promote consumer loyalty.
•
•
•
•
Requirements for a Successful Local Marketing Program In order to have successful local marketing programs there are requirements that brands and local marketers must follow: • Brand Consistency Consumer response to marketing that is brand consistent is higher than their response to marketing that has little to no consistency from program to program. In order to make that initial impact on consumer, brands must focus on making sure that their marketing follows brand guidelines but still allow for local relevancy Local Relevance Consumers relate more closely with marketing that has local relevancy. Brands that allow their local marketers to include information such as store location, manager photos, or even employee testimonials create greater connections than national advertising. Consumers who create relationships to brands in their local market have higher consumer loyalty to those brands than those who relate to national advertising.
•
- 7 - Local Marketing Landscape | The Local Marketing & Advertising Bureau
•
High Quality Advertisements In order to make an instant impact on consumers, all of your marketing must include high quality advertisements. Local entities that create advertisements better looking advertisements that include brand content and assets gain greater response rates then those that are of low quality and do not have a advertising agency feel to them. Optimize Campaigns Creating not just advertisements but complete localized marketing campaigns across all forms of media will reach consumers faster and more efficiently allowing for greater brand and local recognition resulting in consumer loyalty and increased traffic and sales.
•
Local Marketing Solution Providers A number of companies have emerged as solution provides to brands and advertising agencies in supporting local marketing. Below are the current leading solutions: adgiants adgiants provides the full-service, marketing and advertising solution, incorporating traditional agency processes and procedures into a comprehensive application service provider (ASP) model. adgiants empowers small businesses to solve their own advertising and marketing needs, with the assistance of proprietary software and the expertise of a fully staffed, virtual agency. No matter what the medium, the user can leverage the expertise and functionality of adgiants to help produce strategically sound and impactful advertising. Local Marketing and Media Local Marketing and Media is the market leader in web enabled advertising, marketing and communications technology. Local Marketer allows advertisement from brands down to the local marketer to create marketing campaigns across all forms of media. Many Fortune 500 companies are already using this software to reduce the time and cost of local marketing while producing the highest agency quality ads across Television, Radio, Newspaper, Online, Direct Mail, Out-of-home, Collateral, POS and many other forms of media including localized web sites. Please visit a demonstration of these capabilities at www.localmarketingandmedia.com
Multi-Ad Multi-Ad is a provider of advertising products and services with a progressive, clientcentered approach. Multi-Ad is composed of four divisions: Kwikee Systems, Planner Solutions, Print Solutions and Builder.
Spot Runner Spot Runner is an Internet-based ad agency that makes it easy and affordable for local businesses to advertise on TV. With Spot Runner's approach, local businesses can create advertising for television, one of the most powerful marketing tool available. Spot Runner helps reduce the costs and complexities that are associated with local TV advertising.
- 8 - Local Marketing Landscape | The Local Marketing & Advertising Bureau
Summary Marketing at a local level can no longer be looked at the same way as it has been in the past. Marketers must view their advertising in a way that can maximize its reach down to the most local level. With increased competition and restrictive economics, local marketing quickly targets customers faster than national or regional marketing. Equipped with this insight, marketers can develop local marketing strategies that are better suited to reach their intended consumers. Going forward local marketing will help shape the response to advertising, creating more brand awareness, and resulting in increases in traffic and sales.
- 9 - Local Marketing Landscape | The Local Marketing & Advertising Bureau