National Brands Expect High ROI From Local Advertising

ImageThe vast majority of national brands (88%) in North America are investing some portion of their budgets in local marketing, according to local marketing automation provider Balihoo’s “Research Micro Study: National Brand Use of Local Marketing and ROI” (reported via eMarketer). They are influenced by the location-based social networks, hyperlocal communities and local search that garner consumer interest, but also relying upon outdoor media (like billboards), the TV spot market and radio.

National brands are polarized as to their levels of investment: 29% allocate just 1-5% of their overall marketing budgets to local initiatives, but 21% invest a quarter or more.

While brands recognize that much of purchasing is still done at the local level, they have yet to focus upon local, Balihoo CEO Pete Gombert told eMarketer. “We’ve seen a heavy emphasis on setting up the infrastructure to capture demand and measure demand at the local level [in order] to bring that sophistication up to the national level.”

Interestingly, larger national brands ($1 billion+ revenue) are 49% more likely to invest in local marketing than smaller national brands ($100-250 million revenue).

One hurdle is measuring brand impact locally. Fully 25% of advertisers in North America report an inability to track ROI at the local level. That leaves a majority that is able to track local efforts, but 58% of national brands nonetheless neglect to calculate ROI of local programs, a decision that likely hampers their ability to justify and grow local investment. Companies that do use ROI metrics to measure national campaigns are 35% more likely to invest in local marketing than companies who do not use ROI as a marketing metric.

Fully 37% of those brands expect local ROI to be exceed national returns, and 44% expect similar ROI from both. Only 19% expects greater ROI from local marketing over national marketing. Of their national efforts, 63% expects the ROI to range anywhere from 150% to 300% of their initial investments.

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