Study: Brands Expect More ROI From Local Ads Than From National Campaigns

More and more national brands are taking their focus down to the local level. That makes sense: People, after all, live in specific places. National brands have advantages of scale, but they also need to reach their customers on an individual level. One way to target specific groups is to break them down locally.

A new study from Balihoo backs up the claims that brands anticipate more return on investment when they go local. According to the research, 24% expect national marketing campaigns to generate an ROI of 4:1 or higher, while 36% expect local marketing campaigns to generate an ROI of 4:1 of higher.

“The closer you get to the customer, the more ready the customer is to buy and the more targeted you can get with your message,” Balihoo director of marketing, Susan Tormollen, says.

Additionally, the study found that national brands that do $1 billion+ revenue are 49% more likely to invest in local marketing than smaller national brands ($100-250 million revenue). That also makes sense, since big brands have more to spend than smaller ones and can spread their advertising and marketing budgets out across multiple avenues including local.

Of course, a national brand that goes local needs to be in hundreds, if not thousands, of markets. That takes time and money, which is where Balihoo comes in. The company specializes in automating tasks to help local affiliates keep up with the pace and demand. “Making sure local search registrations are all done consistently for every single affiliate is the first step,” Tormollen says. “National brands will do one or two things automated, and then they will add a third or a fourth.”

Automation is a good way to save time, effort, and money, but it raises an issue. Namely, if local marketing works because it’s so well targeted, doesn’t automating tasks risk losing that distinctiveness? The reason local works — from brands such as Groupon and LivingSocial to hyperlocal blogs and other publications — is because they provide unique content. (Think the cheeky editorial that accompanies LS’s deals.) Creating this content requires a certain understanding of the city, town, block, etc., an understanding that is impossible to mimic via automation.

So, yes, national brands can have success in local markets using some types of automated content. It wouldn’t be difficult for an electronics store to offer deals for people who wanted to watch X football team play on Y day. But when it comes to a deeper understanding of the area, there are some things a computer can’t do.

Noah Davis is a senior editor at Street Fight.

  1. Shane Vaughan
    May 23, 2012

    Hey Noah – Shane Vaughan here, CEO of Balihoo.  Thanks for mention in the article.  We believe, as you do, that local is absolutely critical for national brands to “do right”.  It’s fundamentally the place where the consumer chooses to exchange their money for a particular product or service.  

    One point I wanted to clarify with you however is how we go about automating local marketing.  The reason it’s so difficult (and hasn’t really been done before) is because no one has cracked the nut on automating the strategy while allowing for the local customization and “flavor” of a specific market.  

    As you mention in your football example, using data to understand a local game time and promote around it is not particularly ground-breaking.  However, when you can allow the store manager, who knows that the star QB is out injured and an unknown but talented backup is taking is place, promote the jerseys for that unknown player just before he himself becomes a star – now that’s powerful.  
    That what Balihoo does – combine enterprise-class strategy and execution with local input to drive effective local marketing.  

    1. Shane Vaughan
      May 23, 2012

      Typo – I meant CMO of Balihoo.  

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