At the Local Search Association annual conference a few weeks ago, search and marketing experts in the local space provided insights into trends and challenges the advertising, marketing and search industry faces today.
Here are 10 of the top takeaways shared at LSA17.
1. Location drives almost all consumer engagement, even for national brands
According to Rob Blatt at Momentfeed, 85 to 95 percent of consumer engagement for brands happens through location assets such as local listings and local pages. That would explain why 50 percent of brands are using location data to target customers.
A strong shift in marketing budgets toward location-based marketing is naturally following that trend. Data from the Location Based Marketing Association (LBMA) found that 25 percent of leading brands’ marketing budgets are spent on location-based marketing, and that number is projected to rise. Companies in the US increased use of location-based marketing by 5 percent from 2016 to 2017, while those in Canada increased use 6 percent and those in the UK 7 percent.
In terms of dollars, Neg Norton, president of LSA, shared that in 2016, $12.4 billion was spent on location-targeted ad spending, rising to $32.4 billion by 2021, equivalent to 45 percent of all mobile ad revenue.
With local often being synonymous with location in the marketplace, these numbers emphasize that local marketing and local presence are just as important as national campaigns. Last month, I observed factors that influence the appearance in search results on Google Maps, and notably, national brand reputation was not a ranking factor.
As consumers increasingly look locally for information, all businesses — whether traditional SMBs, franchises or local stores belonging to national brands — must recognize how location needs to be a core part of their marketing strategy.
2. Location is much more than targeting a place
Long gone are the days when location was solely used to target based on proximity. Location data has grown much more abundant and rich in its insight to consumer preferences and profiles. Shashi Seth of xAd shared how the increasing volume of location data can be used to build consumer profiles that allow for better and more productive targeting.
Four out of five mobile phone users have smartphones. These always-on devices are being checked, on average, 46 times a day and provide constant location data through sensor technology such as GPS, Bluetooth, WiFi, apps, compass, accelerometer and gyroscope functions built into the devices.
Likewise, the number of sensors, such as beacons, being deployed to detect those devices is exploding. In Q2 of 2015, there were approximately 900,000 such sensors worldwide, growing to over 13 million by the end of 2016 — growth of almost 13.5 times during that time span, according to data shared by Marianna Zaslavsky at Unacast. And that number is expected to grow to 500 million by 2021.
The volume and frequency of location data being transmitted may be aggregated to determine broader trends. Oren Naim with Google shared new functions on Google Maps that provide live data on its crowd indicator for locations such as restaurants. That data can be further analyzed to profile the audience at a specific location.
But Seth explained that, broken down by individual, location data maps a consumer journey that reveals information such as what you like to eat and where you shop, whether you work out and what you do for entertainment. It provides frequency and time of day for various activities. Demographic information such as income, gender and age can be extrapolated by where you live, shop and work.
Source: xAd presentation at LSA17
This incredibly rich data may be used to effectively target users with relevant content, leading to better returns. LSA will continue to explore location and how to use it in local marketing at its Place Conference later this year.
3. How do you scale local?
While consumers demand local information, brands like Walgreens with thousands of locations are challenged to manage local information across the country. Walgreens, Brandify and Brandmuscle covered those challenges, including the following:
- The tension between brand consistency and personalization
- Managing accurate content and messaging
- Fragmented control over local managers
- Development of an efficient process to maintain local content
- Non-brand-controlled platforms such as Google knowledge graphs
Executing locally is still evolving and remains a company-by-company decision. By definition, it is hard to template local success, and that might seem to favor giving local managers greater power in making decisions over local marketing and content. Many brands haven’t reached that point of trust or training yet or have operations that demand more operational consistency. Given the right support, either a top-down or bottom-up strategy can be successful.
Walgreens uses an approval process for adding content that has helped scale local content more seamlessly. Regardless, this will be an area of continual development, driven by the value of local and the influence of consumers who want to know if they can bring their dog into a store or if it is closed because of weather.
The challenges with scale may also be an opportunity for smaller agencies and marketing providers. Niche practices by geography or vertical allow focus where their strengths lie and where others who rely on scale may not be capable of or willing to work.
4. Attribution is getting better — and becoming necessary
Another area in which location data is making a difference is attribution. Accurate attribution has long been sought by both clients and marketers to justify work done and demonstrate ROI. Allyson Carper at Brandify stated that online-to-offline attribution is the industry’s path to success.
Improved location data available today makes it much easier to track store visits. While attribution is typically still a comparison of usual traffic to post-exposure traffic at a location after a specific campaign, the volume of data makes such comparisons much more accurate and meaningful.
More detailed data, such as profile-building described in the consumer journey above, also allows a deeper analysis of who is the most responsive audience. For example, in a campaign for a quick service restaurant, it was presumed that consumers who frequented fast food restaurants were the best target audience. Ninth Decimal’s attribution analysis helped reveal that consumers who were DIY enthusiasts, movie enthusiasts and leisure travelers were better targets. Such insight allows future campaigns to be refined and better targeted.
5. Privacy laws: the threat to local marketing
While there was no planned discussion at LSA17 on the impact privacy laws may have on location-based marketing, the issue was raised — and rightly so. All the benefits and increased ROI of using location data could come crashing down if overly restrictive regulation on the collection, distribution and use of location data is passed.
The problem is two-fold. First, location data is being categorized in proposed legislation as personally identifiable information subject to protections provided to data, such as health or financial information. Commonly, opt-in permission and disclosure requirements are imposed as part of the regulation, with significant penalties for non-compliance. Such regulation may impose restrictions that create serious barriers to use of that data. Second, states are looking at individual and different approaches to regulation, making compliance very difficult, since the future potentially holds numerous different and conflicting regulations across physical state borders that online content often does not adhere to.
There are also some broader concerns with the use of targeting data including location. The FTC released a paper last year exploring how big data might be used in a discriminatory manner. For example, if location data were to be used in a manner that treated users from a predominantly African-American neighborhood differently, those users may be impacted in a discriminatory fashion.
These are issues that the industry must tackle in a unified and intentional manner or risk losing significant innovations made possible only with the use of rich and voluminous data.
6. The threat to traditional branding
Brands have traditionally relied on consistency and control of brand assets to maintain the image and reputation they want in the public sphere. But that control is being hijacked by social media and other consumer-generated content. Reputation can crumble to the ground with one viral tweet. Consider the over 200,000 users that left Uber after the #DeleteUber movement.
Brands such as Chick-fil-A recognized this shift toward a public definition of reputation and expressed having to adapt to managing social media in trying to maintain its brand identity. On the other hand, traditional SMBs are well aware of how reviews can impact their businesses. And consumers are increasingly enabled by Google to generate photos and business information such as hours of operation and to record other observed commentary in local business knowledge graph pages.
The ready access to shopping information is also making consumers less brand loyal. According to Google, 65 percent of smartphone users look for the most relevant information, regardless of company or provider. A recent study by McKinsey also found that only three business categories out of 30 were loyalty-driven. Those three were mobile carriers, auto insurance and investments.
That’s not to say that branding isn’t important. Keeping your business top-of-mind pays off, as consumers are more likely to buy from companies considered first. But consumers are much more likely to look around every time they shop and hear many more opinions that influence their decisions. Managing online reputation will continue to challenge local businesses.
7. Companies must continually innovate, and build a process to do so
One constant in the marketing industry is change. LSA17 was a microcosm of such change: 75 percent of companies at the conference were not there three years ago. Everyone agreed that innovation is necessary to keep up with such change. Big brands such as Blue Cross Blue Shield have had to innovate to adjust to changing healthcare laws, and agencies such as Propel Marketing seek out employees who think outside the box to grow the company.
Steve Nedvidek, Chick-fil-A’s innovation specialist, shared three stages of innovation that the household brand has gone through, providing lessons for any size business. Stage 1 is during the early stages of a business, when lots of innovation is needed to establish the business identity — for example, introducing the boneless fried filet in the Chick-fil-A sandwich, inventing franchising and being the first to open locations in malls. Stage 2 is during the growing stages of a business, when execution is more important and innovation is periodic — Chick-fil-A came up with the self-preservationist cow spokesperson and slogan “Eat Mor Chikin” during this stage. Stage 3 is where it is today, encouraging systemic innovation in a maturing enterprise where they face challenges such as how to squeeze $5 million in sales from kitchens designed for $2 million.
Critical to innovating is having a process to do so. Chick-fil-A created a physical space called “Hatch” where innovation takes place. Advice Local holds monthly brainstorming meetings to come up with ideas, big or small. Propel Marketing emphasizes the need to test and analyze ideas, while Kris Barton from ReachLocal expressed that he spends a lot of time shutting down ideas that don’t fit the capability or credibility of the company.
Nevertheless, it is important to not criticize failure that is not a result of execution. And fortunately, failure is much less expensive today, according to Steve Aldrich of GoDaddy. Technology has significantly lowered the barriers to starting a business or experimenting with an idea. So embrace risk and reward innovation.
8. Marketers need to take their own advice
Sharon Rowlands of ReachLocal observed that not enough marketers are practicing what we preach. It is important to increase the productivity of sales by targeting prospects better, the same way providers help clients target their customers. Jon Martinsen of FCR Media further explained the importance of using data to segment prospects to help focus the sales consultation.
Second, recognize the importance of repeat customers. According to Google, the probability of selling to existing customers is 60 to 70 percent, compared to only 5 to 20 percent for new customers. Making sure to invest in customer support is one of the most important things that led to ReachLocal’s recent success.
9. Artificial Intelligence won’t take over marketing… yet
Brendan King of Vendasta noted Amara’s Law applies to marketing: we often overestimate the effect of technology in the short term, but underestimate it in the long term. So it seems with artificial intelligence (AI).
There’s been significant media coverage over the threat AI poses to both the function of marketing providers and their sales teams. Yet perhaps the inability to scale and the complexity of customized local services have helped preserve jobs in local marketing. King stated that 85 percent of all marketing services are still sold through local providers.
Right now, the tools simply are not good enough. The luxury of failure might exist for innovation but not for clients. Andrea Kayal at Signpost and others from TIMIFY and Freshlime all posited that human decisions are still needed to execute quality marketing campaigns. AI can help streamline some services, but Eric Owen at Mono Solutions pointed out that automation is only as good as the data that is used to direct the work.
Nevertheless, technology — and specifically artificial intelligence — is supposed to help solve complex problems, and in the long term, it’s foreseeable that it will solve the scalability and nuances of local marketing.
10. Mobile prodigies are the future
Mobile prodigies are young people who have never lived in a world without mobile. Julie Bernard at Verve shared some statistics about these mobile prodigies whose consumer behavior will shape the future of local marketing. Almost half spend more time on their mobile devices than on TV. And time with mobile devices continues to grow, with 80 percent saying they spend more time on apps than they did one year ago, downloading on average five to six apps per month.
An astounding 95 percent make in-store purchases influenced by mobile ads, and 56 percent even rely primarily on their mobile device while shopping at home. Yet mobile prodigies also have strong preferences for the content they consume; 80 percent expect tailored ads based on location, interests, hobbies or habits. The rewards are strong for those who cater to these needs, as 60 percent will share sensitive data if ads are customized and relevant.
Appealing content is nothing new, but it takes more resources to customize content. As data and tools make that a more reachable goal and as mobile prodigies grow in influence and buying power, the return will justify the investment into creative content.
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