Most technology companies, online sellers and large brands have rapidly adopted and benefited from digital advertising and marketing strategies. Smaller local businesses such as restaurants, real estate companies, car dealerships and various other physical retailers have taken longer than usual to join the digital marketing game.
This is now changing.
It is important to note that almost everybody (close to 80% of all Americans) uses a smartphone now and they are utilising these smartphones to locate products and services locally. In a recent report by SearchEngineLand, it was found that local searches are growing 50% more rapidly than mobile searches overall.
On top of this, significant progress has been made in hyperlocal technology like WiFi hotspots, GPS and various other tracking technology which has made it very convenient for local businesses to locate, focus their attention on, attract and engage with possible local customers.
Local businesses are now capable of delivering live, area-targeted mobile advertisements that are extremely relevant to their target audience. They show the right ad at the correct moment and in the most opportune place. This kind of accuracy has led to a steady increase in the amount spent on local online advertising.
Could this be the year of local digital advertising?
The online world has discussed the term ‘the year of mobile’ for many years now. Forbes declared for the third year in a row that 2014 was the year of the mobile and then extended this run in 2015. LifeHack called 2016 the year of the mobile.
The reality is that initially, people used the internet from a desktop most often and this then transitioned mobile devices. It is evident from data collected over the last few years. You can measure the way people access the internet best by seeing which medium is seeing the highest amount of advertising spend in. This is very clearly the mobile devices. This proves that we are living in the era of the mobile.
Here are some stats for you:
- Facebook’s advertising revenue in 2016 was predicted to be $26 Billion of which close to $22 Billion was mobile advertising revenue. This is close to 80% of the total ad revenue which shows that Facebook is predominantly a mobile company.
- Just under 70% of programmatic digital display advertising is done on mobile.
- Businesses make two dollars in revenue for every dollar invested in local ads through AdWords.
- 58%of senior marketers consider local marketing an essential factor for a business’s profitability and growth
- Just under 60% of senior marketing specialists believe local marketing is a key factor for an enterprise’s profitability and growth.
- Just under 90% of customers who make local searches from a mobile, take an actions such as calling the business, buying something or visiting the shop within a day.
Small to medium businesses in the United States are spending more on advertising and particularly through mobile. Why is this happening? This is happening because most people own a smartphone today. How do most people have smartphones?
- Android has democratised the smartphone market by introducing low end as well as affordable smartphones. Therefore, the people who weren’t buying smartphones before because they couldn’t afford it or didn’t want to spend too much money on a phone, now have a far more affordable option.
- In this era of mobile, businesses are moving their advertising spend from traditional channels to mobile in order to profit from this trend. Some of the best marketing channels through mobile are:
- Google AdWords and Facebook Ads local targeting. Businesses can target customers within a set distance from the business’s address.
- Snapchat filters can be targeted to customers in a particular locality. Imagine the impact this can have for a small eatery near a big music festival.
- Yelp advertising can assist you in being recommended on the Yelp profile of one of your competitors as a recommended similar business and this is useful on mobile.
- Instagram’s exponential rise and popularity among people all through the day makes it a highly viable marketing tool for design focussed local enterprises.
- Small, local enterprises can prosper if they accept that digital marketing is here to stay and to dominate. If, however, they do not accept this then the 800 pound gorilla will eliminate them from the equation of relevance.
Amazon is the 800 point gorilla in today’s conversations around local businesses and marketing. Prime nets Amazon around $8 billion per year in subscription fees alone. This doesn’t even count the money they make from products that Prime members buy!
Is it possible for small, local enterprises to compete with Amazon? Yes, but it will need inspiring ideas and skilful execution. Look at the example of local American chains like CVS. CVS has a huge presence in big American cities. However, their stores are now increasingly spare as a result of Amazon.
How then can they compete?
Here are some interesting statistics regarding local advertising:
- Over half of local mobile searches leads to a store visit.
- Over 60% of local searches are done by users who are yet to make a decision on a retailer which means that there is traffic with high intent that is there for the taking.
- Three out of four shoppers say that they would be more inclined to respond to a location-based ad message.
- One in three mobile searches is local and this means that there is a keyword which is related to location. For example, eatery near meor nearest cafe.
- Just under 70% of customers have an expectation that business search results will be inside five miles of their location.
How small and local digital advertising could look
- Local enterprises like automotive dealerships will probably never deal with a digital competitor. It is possible that at the start of the 21st century, there were fears among car dealerships that places like eBay could occupy some space in the business of selling cars. However, today even used car dealerships are thriving. This shows that online selling has not made a big difference to the way cars are sold.
- Other enterprises that function locally such as eateries also don’t need to go toe to toe with Amazon but they do have to go up against local delivery services and organisations that serve meals in your office. There is opportunity here as well. Just because a business isn’t dealing with competition from Amazon and so staring into possible extinction doesn’t mean they don’t require creativity in the digital world to remain relevant.
- There are four large spaces where each local business needs to focus to survive and possibly even prosper in these digital times. This will not work universally for all businesses but they are at the very least, good thinking tests and at most, fresh avenues through which growth can happen:
- Location-based advertising just like we discussed earlier with the utilisation of tools like Facebook, Google and Instagram.
- Find collaborations with suitable startups to drive business. For example, if you own an eatery, tie up with a food delivery app like Seamless in the US and Swiggy in India. This ensures that your market consists of both people who want to enjoy a meal in your restaurant as well as people who want to enjoy a meal from your eatery but in the luxury of their own home. Not tying up with suitable startups will limit your market and cause you to lose out.
- Develop ecommerce channels and make use of tools like retargeting through Facebook to increase online sales.
- Very recently, we have seen enterprises who have not been creative and have shunned entering the online world suffer significantly on the public markets. It is important to ensure that others don’t suffer the same fate.
Authored by: Santhosh Palavesh, MD, UMM DIgital