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Digital Ad Buying: Good for Local Businesses?

Local businesses have a lot of digital ad buying power according to BIA Advisory Service’s U.S. SAM™ Survey of Advertising and Marketing. Businesses with 20-99 employees spend more than $47,500 per year across an average of 15 media channels, while smaller businesses with 1-19 employees spend just over $6,400 per year on an average of eight media channels. Both small and medium businesses plan to increase their spending in their favored digital media channels in 2020. Of course, the most recent iteration of this survey was conducted in 2019. 2020 hasn’t panned out for local small-to-medium businesses (SMBs) like everybody thought it would.

The coronavirus pandemic has derailed business plans and eaten through safety nets. The impact of stay-at-home and social distancing guidelines have forced many business owners to slash expenses, and the ad industry has certainly felt the effects of these tough decisions. To help, both Google and Facebook have announced that they will be giving SMBs some relief in the form of digital ad buying credits and grants. Google will deposit $340 million worth of account credits into Google Ads accounts, and Facebook will put $100 million in both ad credits and cash grants towards the support of up to 30,000 small businesses.

As evidenced above, SMBs spend a lot of money on these ad platforms. Google and Facebook earn a lot of money from these smaller enterprises predominantly advertising to their local clientele. With all the money these businesses spend on digital ad buying - and with powerful companies such as Google and Facebook working overtime to preserve that spending - it begs the question: is digital ad buying a good investment for local businesses?

Who is Advertising Locally?

At one time, digital advertising seemed like a pastime solely of big, national brands, but within the last decade, ad platforms including Google, Facebook, Twitter and others have made digital media much more accessible and affordable for SMBs. In the previous four years from 2015 to 2019, national marketers and local SMBs each accounted for about 36% of spending targeting local audiences, this according to the IAB Local Buyer’s Guide. The remaining 28% of spending came from larger local businesses.

How Affordable is Digital Ad Buying for Local SMBs?

Digital ad channels have some of the highest ROI of any advertising or marketing endeavors. More than just generating sales, paid search and social ads give your brand immediate visibility among your audiences. This brand awareness will help you in the long-term.

The beauty of this medium is that your spending on platforms is determined by your budget. For as little as $5-$10 a day, your paid or sponsored ads can find their way in front of local audiences. Unlike a video or radio ad, it takes much less time and expense to produce creatives for these ads, too. No film crew, no recording studio, no voiceover and no hassle - text or eye-catching images work best. Some forms of digital advertising are even completely free, such as email marketing, local SEO and thought leadership on social media.

There are also several affordable strategies you can employ. One very lucrative option is retargeting ads, which are targeted at web users who previously visited your website. These users are generally seen as higher quality since they already showed an interest in your brand, and they’re typically more likely to buy from you.

To help increase ROI for your digital ads, online ad platforms come with the advantage of analytics tools that keep your campaigns on course. You can track impressions, clicks, conversions, costs and more, and make adjustments to improve your performance in real-time.

What Can Local Businesses Do With Digital Ads?

Digital advertising utilizes huge amounts of data to measure anything from ad performance to audience demographics. This high degree of detail really benefits local SMBs who usually only want to show their ads to a specific local population. With advanced capabilities, platforms like Google Ads have made it possible to digitally target specific geographic locations and consumers with precision.

Geofilters allow you to target local audiences in a particular area. With these advanced tools, local sellers will be better able to deliver their messages to the right people in the right places. You can do this in a couple of different ways. Geotargeting allows you to display your ad to a group of people who live in a certain geographic location. This can be a city, a metro area, or just a single neighborhood. Geofencing, on the other hand, allows you to target ads at anyone who passes through predetermined parameters. Geofencing triggers can be set up around your business, around your competitors, in proximity to an out-of-home ad like a billboard or another potential conversion zone.

Mobile advertising offers you the opportunity to target consumers where they will be the most receptive. According to Google’s own research in local search behavior, 50% of consumers who conduct a search on their smartphone will visit a store within a day. Only about 34% of consumers searching with a computer or tablet are likely to visit a store afterward. This is why it is so important for local businesses to ensure that their ads and their websites are mobile friendly.

Programmatic ad buying is probably a term you’ve heard before, and while it’s somewhat of a buzzword among media buyers, programmatic buying isn’t all that complicated. Essentially, when the process is programmatic, it means you leave the bidding to an algorithm that measures your ads, your audience targeting preferences, and availability of ad spots. Most digital ad buying is automated this way, with so much data analysis involved, increasing the efficiency of your advertising efforts since you don’t have to spend a significant amount of time doing all of the decision-making on your own.

Another benefit of programmatic ad buying is the high degree of specificity with which your ads can be targeted. Facebook, for example, tracks some pretty in-depth data points for you such as age, education level, profession, interests and even important life events such as getting engaged, moving to a new city or starting a new job.

Are National Advertisers Affecting Performance?

Local SMBs often find national advertisers with their bigger budgets and more rigorous targeting efforts intimidating to go up against when they decide to invest in local digital ad buying. However, local businesses have a significant home field advantage in their local markets.

Despite popular belief, the best way to maximize exposure locally is not to broaden your audience parameters but to narrow them. You have the benefit of knowing your customers extremely well, so when it comes to targeting a specific audience online, you have a clear idea of just who you’re looking for, including their relative age, gender, geographic location, interests, profession and more. By having such a clear buyer persona, you’ll be able to increase the chances of your ad being seen by the right people and decrease the risk of bigger brands beating you out.

In Times Like These, What’s a Local Business to Do?

The global pandemic caused a very swift disruption in media channels as brands have opted to pause or shift budgets in response to cancelled events and changes to consumers’ daily routines. However, Advertising Perceptions notes in their Coronavirus Effect on Advertising Report that of the 61% of advertisers who have maintained or reallocated budget to various media and ad formats, a quarter maintained or shifted budgets to paid search while 19% said the same for paid social. This is because digital advertising channels are some of the easiest to measure, and in times of crisis, it’s reassuring to see that your ad dollars are directly driving sales or other desired outcomes.

While small businesses will certainly face uncertain times now and in the months to come, investing in digital ad buying is one of the most cost-effective and reliable media channels for your business. Through precise targeting and messaging, local businesses can continue to play a role in their communities and drive business, even during a public health crisis.

To learn how to orient your digital advertising strategy to reflect the current business climate, our media stewards at The Ward Group are available to offer assistance. Reach out to us with any questions today!

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