Digital may be the future of local marketing, but not everyone is ready to abandon traditional means of reaching their customers.
The 2018 State of Local Marketing Report from local marketing solutions provider BrandMuscle is due to be released on Thursday, offering an assessment of the channel marketing investments of national and global brands.
BrandMuscle’s president of consumer brands, Paul Elliott, spoke with Street Fight in advance about the latest findings, which are based on more than 2,700 survey responses from retailers, franchisees, dealers, and channel partners. Though the report points to the inevitability of advances in digital and other innovations shaping the future of local marketing, Elliott said a gap still remains in some segments of the market where the cost of changing keeps some brands from going all-in.
From a high-level perspective, what are the prominent changes that you noticed with the latest report compared with one year ago?
It is really interesting from our perspective because the survey results are coming from business partners at the local level. It’s providing a narrative around what they’re looking for from the brands that they’re connected to — everything from the type of support or expectations to financial support, in the form of co-op and MDF [market development funds]. One of the big highlights for us this year is the broadening of the gap between those things that the enterprises are willing to fund or cover through co-op, and those tactics that the local business partners believe are important and want to execute. When you have that misalignment between what they want to execute and what is feasible through co-op, that provides a lot of insight as to why things are or are not happening.
When you look at certain shifts, or a lack of a shift, you pick at the surface and find out that whether it’s co-opted or not will play a role as to whether those local business partners will go at it full force.
One of those gaps that I am referencing is that local business partners want to increasingly execute in digital, but there is a reluctance or slowness in the brands or enterprises in shifting their dollars from traditional coverage in marketing and media to digital tactics. That is creating a divide or a gap between what the local business partners want to execute and what they are able to execute without putting in their own dollars.
One of the other obvious things—there is never enough budgetary dollars to go around when we’re talking about local marketing. You see a desire to increase digital and a reluctance to turn off traditional. That is creating a scenario where they’re not able to fund all of the marketing they are looking to do.
That’s a big challenge that we have to look at and it’s causing an either-or type of scenario, where they have to either pick digital or traditional, as opposed to more of an and scenario where it’s a truly integrated marketing program.
We know that true success means reaching consumers in different channels with different tactics at a variety of times. The consumer journey has changed so dramatically, and they are so reliant on different touch points, technology, and mediums.
At the local level,are making a choice and sacrificing one or the other because of budget limitations.
Our overall premise is around precision marketing, which is a concept our company has pioneered. It’s the idea of taking all of the possible cost out of the equation. How do you make sure there are no wasted CPMs or direct mail sends, or impressions or clicks—that everything you’re doing is purposeful, highly targeted, and find a way to cull the waste. It’s only when you get to that level that you’re able to actually be an integrated marketer on a local marketing budget.
How steep is the cost factor that local marketing faces when it comes to digital? How high is the barrier to get into that arena?
One of the starting points for us was to look at it from the lens of co-op. That’s where we had the greatest access to data. About $1 billion of the co-op funds pass through BrandMuscle on an annual basis. We saw about 45% of those budgets go unused and, for a big percentage of that, the reason why was the lack of tactic availability.
When we looked at this about two years ago, only 20% of the survey respondents were trying to get to more digital than they were currently executing. When we reran that same question this past year, that number is up to 40% are looking to infuse more digital into their mix. But well over 50% weren’t willing to sacrifice their traditional to fund that additional digital. That [indicates to] us the comfort level with traditional marketing, and hopefully it is indicative of results and performance coming from traditional marketing.
When we’re talking incremental budgets, we’re talking $500 to $1,000 per month to fund a number of digital programs [local business partners] believe they need, but they are struggling to find those dollars.
What is driving “precision” in local marketing? Where is the real innovation happening that gives it appeal?
You have demographic, psychographic, and behavioral data as your set for tightly targeting that prospective customer. What that didn’t ever give you is an understanding of the role that location plays in that. So, for us, our big a-ha moment was when we layered on top of demographic, psychographic, and behavioral data the sense of location—knowing where that customer is right now and where have they been and, ideally in the future, where they are going. That allows you another level of precision that didn’t previously exist, or when it was used, it wasn’t usable at scale or useable at the granular level. Now you can finely tune the marketing.
Joao-Pierre Ruth is a contributing writer at Street Fight. This interview has been edited for clarity and length.