||Borrell Finds 'Local Marketers Love Promotions'
In its 2013 Local Promotions Forecast, Borrell Associates notes, "something odd happened in 2007 in the world of marketing.
While the economy was running on fumes and getting shakier by the day, local businesses did something they had never done before. They began spending more on promotions and 'owned media' -- marketing channels that they control -- than on classic advertising. And, as the economy started to recover, they began spending a lot more."
"Simply put, local marketers have fallen in love with promotions," writes Borrell, "and there appears to be no turning back. Even as the economy improves, they're issuing more coupons and discounts than ever, launching more contests, reaching out to nearby customers through mobile devices, collecting more email addresses, and promoting themselves heavily on Facebook, Pinterest, Linkedin, Twitter and their own websites. It's one key reason so many companies are rushing to offer digital 'services' to complement their advertising offerings.
"Six years ago local businesses spent 10% more on advertising than they did on promotions. Last year, they spent a stunning 81% more on promotions. Even as local advertising bounces back at a rate of 8% this year, the $101 billion they're likely to spend will still be 16% less than what it was in 2007. Meanwhile, local promotions is forecast to be 33% more than it was in 2007, reaching $176 billion this year."
If that sounds like bad news for advertising providers such as radio, calm down. Borrell says, "It's not accurate to say that traditional advertising is getting dumped for a more attractive form of direct-to-consumer marketing. In fact, advertising is the fan to the flames of store promotions. Local advertising expenditures have been on the rebound since 2010. But, businesses are spending a lot more on promotions. Instead of carving it from traditional ad budgets, the money appears to be coming from things like slimmer profit margins (taken through steeper discounting), the salaries of former workers who used to handle marketing tasks, and from agency fees, printing budgets and postage."
Borrell concludes, "It's clear that something monumental has happened with marketing expenditures, and it's logical to credit interactive media as the change agent. New patterns in marketing create opportunities for those who are aware of them -- but only if they act. Local marketers can't continue to do business the old way and expect to survive."
(Source: All Access, 06/28/13)