Outside of the largest markets, the majority of radio ad revenue comes from local direct ad buyers. So, what media are the furniture stores, bicycle shops, restaurants and other local businesses buying now? And what do they plan to spend more on? For the answers, Borrell Associates from March to May surveyed 1,920 direct buyers, who had an average gross revenue of $3.3 million and assigned 5% of their revenue to advertising. The semi-annual survey found radio, social media and events/sponsorships top the list of the most used media types. Each is bought by 50% of the sample. The average radio buyer invests $42,330 annually in the medium. That was second only to broadcast TV at $109,263. But TV’s higher annual price point means only 30% of businesses surveyed buy it and their average investment in TV dropped about 15% in the last couple of years, Borrell said.
Seven of local buyers’ top 10 most used media were traditional channels. The slant toward traditional is likely due in part to the fact that participants were selected from the rolls of traditional media companies. Borrell notes that many smaller advertisers that purchase only digital advertising are not represented in the survey.
Streaming audio finished dead last among 20 media types studied with just 9% of local businesses currently buying it with an average annual expenditure of $16,140. Borrell attributed its lackluster performance to the small fraction of podcasts that are local in nature – most shows target a national audience. However, there are signs streaming audio is gaining traction among local buyers. When Borrell narrowed its survey lens to look at just those local businesses that spend 10% or more of company revenue on advertising, streaming audio shot to the top of the list. Those who invest heavily in advertising are 146% more likely to use streaming audio than those who invest less in advertising. “These are the believers, these are people who spend phenomenal amounts relative to how much money is in their total coffers, on advertising,” Borrell said.
In addition to streaming audio, these more aggressive advertisers were at least twice as likely to buy content marketing, broadcast TV and streaming video. “What this tells us is these big gamers… are out there with streaming audio and content marketing, and broadcast TV and streaming video and OTT at twice or more the rate of everybody else,” Borrell explained during a webinar last week. Moreover, these big spenders possess a higher degree of marketing savvy. They are twice as likely to be categorized by Borrell’s analysts as “marketing masters” based on their level of marketing sophistication.
The survey drilled down into which media businesses plan to trim or eliminate from their budget and those they intend to increase or start buying for the first time. In a positive sign, two thirds of businesses said they plan to increase overall spending, or buy something for the first time this year, compared to 42% that intend to decrease something and only 1.5% that plan to eliminate something altogether. Borrell’s take: “What they’re saying is, ‘We’re just going to trim, we’re going to take a little money from here and put it there. They’re maintaining a relationship.”
Social And OTT Are Hot
Social media, search engine marketing and events scored the highest for getting a spending increase from local direct buyers. They also finished lowest for getting a haircut. The biggest target for cuts is print media. More buyers plan to decrease or eliminate magazines and newspapers than to increase or add them to their media plans.
Among traditional media, radio had the highest percentage that plan to increase or start buying it for the first time at 12%. On the other hand, a nearly identical amount (11%) say they plan to trim or eliminate radio. Borrell’s theory among those reducing radio spend is that some of those dollars are shifting to over the top (OTT) media. The data shows radio is the most likely place to find OTT buyers among traditional media advertisers. Seven in ten OTT buyers also use radio and they invest an average of $78,182 on AM/FM. That is 85% more than the average expenditure on radio. “There’s a huge amount of radio advertisers buying OTT and they’re the bigger radio advertisers and that gives us a clue as to where some of that money is going.” Borrell said.
Borrell’s definition of OTT goes beyond ads served on Pluto, Sling, Hulu, and other ad-supported streaming video platforms. It encompasses virtually any type of video marketing. Who produces it? Nearly half of local advertisers surveyed have an internal team producing videos. More than one third (37%) rely on a media company, which means radio companies with the resources to produce video can target those budgets. Where are the videos being distributed? The biggest outlets for video advertising are the advertiser’s social pages (76%) and company websites (62%).