Much of the innovation in local over the past few years has focused on small and medium-sized businesses — a previously underserved segment now reaching web adolescence. However, between traditional media, daily deal providers, local marketing pure-plays, and major tech firms like Facebook and eBay gearing up local sales, the SMB market has never been more crowded, and the still relatively immature ecosystem appears to be suffering from its own disorganization.
So where are those national dollars? We’ve seen a handful of startups like LocalResponse — a New York-based social targeting platform — succeed in the national arena, but the bulk of the spend elsewhere appears to be relegated to experimental campaigns.
In a study released today by Balihoo, over 91% of brands said they planned to spend the same or more on local marketing campaigns. That’s a few ticks above what they saw in terms of planned spend for national marketing (88%).
The study also found that while SEO and social media marketing dominated in 2012, more and more brands are looking to invest in new tactics in 2013. While mobile leads the way in terms of new types of marketing, over a third of brands surveyed said they wanted to use online customer reviews (31%) and local blogs (31.5%) in the coming year.
“Local marketing has really become a data game,” Shane Vaughan, Balihoo’s CMO told Street Fight. “We’re not seeing brands dramatically increase the dollars they’re spending on media on a local level, but what we are seeing that brands are investing in the technology to make it easier for local affiliates to spend their dollars more effectively,”
That opinion should perhaps be taken with a grain of salt considering the bulk of Balihoo’s business is building those tools, but Vaugan’s emphasis on the need for brands to lay the groundwork — data sharing structures, conversion metrics, and basic lead generation mechanisms — points to an interesting phenomenon in the hyperlocal space. Whereas innovation typically starts with enterprise and trickles down into smaller segments, the majority of innovation in local over the past five years has been built around a fragmented SMB ecosystem.
Building a product for a distributed network (the SMB market) requires substantially different mechanisms than a centralized enterprise. However, affiliate programs bridge that gap by allowing companies to help resellers and franchisees to leverage the existing local marketing framework, while benefiting from the scale of a national brand. The automation implicit in digital makes affiliate marketing — what is essentially crowdsourcing at a brand level — efficient at scale.
Steven Jacobs is deputy editor at Street Fight.