THINK of an iconic advert – Coca-Cola, Guinness, Lynx? The brand is almost certain to be a giant global player with a massive marketing budget to match. It’s been this way for years. Media agencies have typically worked on high-profile campaigns delivered through TV and other wide-reaching platforms, while much smaller companies have been consigned to the classified sections of the regional press or radio.
But hyperlocal advertising (campaigns typically targeting a very small area – a postcode or village, for example) is changing. A May 2013 survey by consultancy Oliver & Ohlbaum for innovation charity Nesta found that online is now the most common advertising platform for hyperlocal campaigns, used by 52 per cent of respondents, with an average expenditure of £2,278 per year. The introduction of targeting services to TV advertising, meanwhile, is expected to bring more regional companies into the fold. Sky AdSmart, which serves targeted TV ads using Experian data, says that a quarter of the first wave of companies to sign up were new to the medium, including a small Hampshire car dealership.
And it’s a trend that shows no sign of slowing down, according to UM London’s managing partner for digital, Alan King. “Technology is levelling the playing field across the board,” he says. “It’s now possible to target people right down to their specific tastes – someone who likes cheese and fishing in the north east, for example.” And with out-of-home (OOH) mediums like billboards and posters rapidly becoming digital displays (specialist agency Kinetic expects to see 90,000 digital OOH sites by 2016, and over 113,000 by 2020), the opportunities for hyperlocal advertisers will only grow.
To an extent, this will be a boon for media agencies. “It is growing the overall market,” says King. As the SkyAdSmart example demonstrates, hyperlocal platforms can act to increase the amount of firms willing to advertise, bringing in more billings. Given the small size of the potential budgets, however, there is likely to be increased pressure on keeping costs low. As King argues, a £10,000 banner ad is worth an awful lot more to a plumber with a local client base than even a £10m campaign would be to Procter & Gamble – for hyperlocal firms, marketing errors can be particularly costly.
But some in the industry worry about the advertising platforms that bypass agencies entirely. Take FourSquare, for example. The location-based social networking app allows local businesses to push ads directly to those in the area, charging firms only in the event that the ad translates into action on the customer’s part. Combined with the offerings of Facebook, Twitter, Google and other tech firms, some fear that local companies may be tempted to skip agencies altogether.
This seems unlikely, however. As King points out, media agencies negotiate far more cost-effective bulk contracts with firms like Facebook. And the inexorable rise of programmatic buying adds another dimension – “it’s extremely expensive to set up your own ad exchange, maybe some of the largest firms would do this, but not very many.”
Liam Ward-Proud is business features writer at City A.M.