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Executive Summary Section 1: The Importance of Local Marketing for National Brands
The Gap between National Brands and Local Marketing Local Marketing is the Last Mile of Marketing How Effective Local Marketing Can Increase Top-Line Growth Challenges National Brands Face with Local Marketing
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Marketers Increasingly Rely on Digital Media to Reach Consumers at the Local Level
What Is the Local Web and Why Should It Matter to National Brands? Strategy for Addressing Local Web Ecosystem Elements What Are the Ecosystem Elements of the Local Web? Local Websites Search Local Review Sites Location-Based Media Daily Deals Mobile Local Media Social Media Local Web Planning Matrix Strategy and Impact for Addressing Local Web Ecosystem Elements
Section 4: How Three National Brands Are Embracing the Local Web
Case Study #1: National Manufacturer Closes the Gap between their Brand and Local Dealers Case Study #2: National Medical Organization Cures Patient Leads with Local Websites and Integrated Ad Campaign Case Study #3: National Insurance Provider Ensures Local Agents Are Covered
Section 5: Conclusion
The Local Web Is the Linchpin to Effective Local Marketing; and Effective Local Marketing Is the Single Largest Opportunity for National Brands
About Balihoo
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Executive Summary
Local marketing is the last mile of marketing i.e. communication a potential customer receives when they are at their closest point to making an actual purchase decision making it highly relevant when it comes to converting consumers with purchase intent into buyers of a brands products. But for the majority of national brands who sell through local outlets (e.g. dealers, distributors, agents, franchisees, or retailers) local marketing is a highly under-served marketing channel. This paper explains: The reasons why national brands are falling short when it comes to local marketing and why ignoring the problem is simply not acceptable anymore. The transformational shift occurring in digital media. The rise of the Local Web as the dominant segment of the local advertising marketplace. What the Local Web is and how it can help national brands close the loop on the last mile of marketing, and in turn, increase top-line revenue. How national brands can begin taking advantage of the Local Web.
Awareness
Interest
Consideration
Preference
Purchase
BRAND MARKETING
LOCAL MARKETING
Figure 1: The Awareness-Preference-Purchase Cycle However, when it comes to marketing at the local level, where final preference and purchases actually occur, national brands often lose control of the brand message and the effectiveness of their marketing dollars because they must rely on their local outlets many of whom lack marketing expertise and bandwidth to execute the remainder of the campaign. This disconnect between the national and local marketing levels causes lost sales, and there is no doubt that by finding a way to close the gap, brand marketers can significantly improve sales and revenue.
When well-executed, local marketing can essentially close the loop to national brand advertising expenditures and deliver significant benefits, including: Increasing top-line growth without significantly increasing marketing dollars. (See Sidebar, How Effective Local Marketing Can Increase Top-Line Growth) Ensuring that a brands products, services and dealers can be found locally when national marketing efforts have driven them to make a local purchase. Without this last-mile, there is significant waste in the national spend. Building long-term dealer relationships far beyond that of competitors by capturing local demand and delivering leads to a brands local partners. Mitigating competitive demand-gen capture. When consumers have an interest in a brands product category and are driven locally to purchase, effective local marketing can ensure that they are not persuaded to a competitive product. Conversely, effective local marketing allows companies to capture demand driven by competitors efforts by delivering the right message to the right person at the right time. While it seems obvious, its worth pointing out that local versions of, last-mile messages are more effective than mass-market messages because they show the consumer that they matter to the brand, making them feel as if the message is speaking directly to them. For example, an auto repair chain might acknowledge a particular citys recent hail storm in their messages and promote a discount or fast repair turnaround to people in that area whose vehicles were damaged. Because theyre delivering the right message to the right person at the right time, theyre likely to close more sales.
$8M national spend x 2.5:1 ROI = $20M revenue $2M local spend x 4:1 ROI = $8M revenue Total revenue = $28M
Relative to putting all of the dollars at the national level, reserving just a small portion for local efforts results in a 40% revenue increase for this single campaign. There is no other marketing strategy or tactic available to marketing organizations today that can consistently provide this level of immediate return.
The reasons are varied, but they fall into 3 major categories: 1. National brands typically have to rely on a separate entity to execute local marketing dealers, distributors, agents, franchisees, or retailers who are usually business owners or managers and this group is often unskilled in marketing in addition to having a plethora of competing responsibilities, marketing being only one of them. With a reliance on potentially hundreds of independent businesses, executing a well-timed, effective local marketing effort is an extreme challenge. 2. Simply put, local marketing is difficult for brand marketers. It requires customization of messaging and graphics across a growing number of mediums at a highly localized level often across hundreds of cities with multiple outlets in each one. Without technology, its simply not cost-effective for a national brand to modify all of these elements at a local level. 3. Visibility into ROI and effectiveness is practically non-existent, so it is difficult to measure and justify the spending. National brands typically have to rely on sell-through or order data to gauge the impact of local marketing efforts, and this data is typically unreliable and dated. Regardless of the challenges, its critical that national brand marketers recognize the scale of the local marketing opportunity available to them today so they can begin building the organizations and processes that will enable them to effectively execute.
Marketers Increasingly Rely on Digital Media to Reach Consumers at the Local Level
A wide range of media channels exist both offline and online for delivering brand messages to local markets. Traditional media channels will always have their place for building brand awareness, particularly at the national level, but when it comes to what works at the local level, the importance of online marketing is growing significantly because of its cost-effectiveness, the ability it gives marketers to interact on a more personalized level with their customers, and its ability to reach consumers when theyre searching for products and making comparisons. Consider these statistics on consumer behavior which underscore why online channels are becoming so important in local marketing: 70% of U.S. households now use the Internet when shopping locally for products and services (The Kelsey Group; ConStat) 54% of Americans have substituted the Internet and local search for phone books (comScore) Print revenue for Yellow Pages publishers will continue to decline, while online revenue will continue at a double-digit growth rate through 2013 (YP Talk blog reporting on Simba Information Yellow Pages Industry Forecast 2011) The web accounted for or influenced 42% of all local retail sales in 2009 (Forrester) 20% of all online searches (2.8 billion queries/month) and US Local Online and Traditional Ad Spending Share, 33% of all searches via mobile web have local intent 2010-2015 % of Total (Google 2010) 82% of local searches follow-up offline via an in-store visit, $21.7 B 2010 85.9% 14.1% phone call or purchase (TMP/comScore 2009) 61% of local searches result in purchases (TMP/comScore) $24.8 B 2011
83.8% 16.2%
All of this explains the transformational shift that is underway in local marketing and why its fast approaching a tipping point where digital media will soon be the dominant segment of the local advertising marketplace. Research shows (Figure 2) that online/interactive advertising revenues are expected to climb to $42.5 billion by 2015, almost double 2010s $21.7 billion, representing a compound annual growth rate (CAGR) of 14.4 percent. This means digital media will represent 23.6 percent nearly a quarter of all local ad spending by 2015.
Source: Bia/Kelsey, BIA/Kelseys U.S. Local Media Forecast (2010-2015), March 21, 2011 www.emarketer.com
What Is the Local Web and Why Should It Matter to National Brands?
As the number of U.S. Internet users and mobile device owners continues to increase, so too does the amount of online advertising channels available to local marketers who are looking to capitalize on this growing audience. The Local Web is the name for the integrated, growing ecosystem of online media channels that collectively drive local online marketing (Figure 3). The Local Web is how local online marketing happens. A national brand must claim and at least minimally participate in the majority of these integrated channels at the local level or risk being invisible in online and mobile searches in those geographic regions.
LOCAL WEBSITES
Location Based Daily Deals Mobile
Figure 3: The Local Web Collectively, new technologies and the channel elements of the Local Web are changing the way consumers buy and brands communicate. The Local Webs social channels typically encourage consumer engagement with the brand, while the search channels focus more on affecting a consumers purchase intent and conversion to sale.
Local Review Sites Local review sites are playing an increasingly important role as they become integrated into the major search engines results. National brands should claim and fully complete their listings with review sites at the local level to help optimize local search results. Ongoing, they should regularly monitor reviews and have a policy for responding to issues at the local store level. This will ensure that goodwill established by the national brand is maintained at the local level. Automation technology is available to help monitor sites at an aggregate level. Key facts/stats: Yelp has reported they have over 15 million reviews and more than 40 million monthly visitors to their review site. 59% of all local-business searchers say that ratings and reviews are important while searching for a business. (TMP/15 Miles) Location-Based Media Location-Based Media (LBM) delivers multimedia and other content directly to the user of a mobile device dependent upon their location. Consumers use location-based applications like Foursquare, Gowalla and Loopt to search for businesses nearby, and also to check in at business venues. These applications offer an easy, low-cost way for national brands to attract new customers at the local level, retain existing ones through a remember-your-name type of loyalty that consumers want, and track information and statistics about visitors. At a minimum, national brands should set up their brand pages and claim all of their local venues to take advantage of the brand awareness these applications can offer. Key facts/stats: Foursquare, a leader in the space, reported 3400% growth in 2010. In June 2011, Foursquare reported hitting 10 million active users. Daily Deals Bridging the online-to-offline gap, Daily Deals are pioneering a new breed of trial-based advertising. While the popularity of these sites, like Groupon and Living Social are growing at an astounding pace, for national brands, the merits of participating in Daily Deal promotions remain unclear. There is no doubt that Daily Deals can help create awareness and drive traffic into local retail outlets, but how well that traffic can be translated into repeat business and long-term customer loyalty remains to be seen. National brands should look closely at whether or not Daily Deals can support their local objectives before deciding if theyre a tactic that makes sense. Key facts/stats: Groupon had 83.1 million subscribers as of March 31, 2011. (Groupon) Groupon has raised $1.12 billion so far in venture funding. (Mashable) Mobile 2011 is being called the Year of Mobile as a result of the growing popularity of smart, mobile, Internet-connected devices. More than ever, consumers use mobile devices, like smart phones and tablets, to research purchasing decisions within a 10 to 20 mile radius of their location. Because of this, local websites are highly important for national brands, and mobile versions of these websites are beneficial. Brands should also consider how text messaging campaigns and QR codes might support their local marketing objectives. Key facts/stats: Mobile web access will surpass traditional PC access by 2013. (Gartner) 53% of mobile searches on Bing have a local intent. (Bing) U.S. local mobile ad spending will grow from $404 million in 2010 to $2.8 billion in 2015. (BIA/Kelsey) 95% of smartphone users have looked for local information. 61% call a business, 59% visit a business, and 44% actually make a purchase. (Google) Local Media Although traditional media continues to decline, the online version of local media outlets are gaining momentum as consumers consume local content via the web. Many people, especially baby boomers, still draw conclusions about the strength of brands from traditional print and broadcast ads. National brands should continue to consider traditional media when planning media in local markets.
Key facts/stats: Consumers in local markets find print newspaper advertising to be most credible, with 66% saying they trust ads in the local print edition, followed by ads on local TV at 51%, local radio at 46% and community websites at 45%. (Nielson) Digital media will represent 23.6 percent of all local advertising by 2015. (BIA/Kelsey) The U.S. local advertising market is forecasted to reach $144.9 billion in 2014. (BIA/Kelsey) Social Media Potentially the hottest space in the Local Web, social media has become critical to the interplay between brands, local resellers and their consumers. Social media is a great way for brands to build awareness and create loyalty among consumers who become their fans at both the national and local levels. Brands can greatly extend their reach through the visibility gained when a fan follows them on Facebook or Twitter. For example, when a fan likes a brand on Facebook, the brands messages will then show up in the fans newsfeed, allowing the messages to be seen by all of the fans friends, which typically number in the hundreds. Key facts/stats: Seven out of 10 consumers are more likely to use a local business if it has information available on a social media site. (comScore Networks/TMP Directional Marketing) Facebook has more than 750 million active users. (Facebook) Twitter has 175 million registered users. (Twitter) Linked in has over 100 million users. (LinkedIn) Advertising With sophistication growing in targeting, technology and reporting, advertising via social media may very well surpass search advertising in the long-term. Using the precision-level targeting available for social media sites, national brands can personalize ads at the local level, making them: 1) more relevant to readers, 2) more likely to perform better for the brand, and 3) more cost-effective for the brand especially when compared to most traditional and search media. And because of the analytics available through social media sites, ads placed there are extremely measurable, giving brands a clear view of ROI. Its important to note that while its highly recommended that brands engage in social media sites at the national and local levels, doing so is not necessary for a brand to take advantage of social media advertising. Key facts/stats: Worldwide ad spending on social networks will top $6 billion in 2011. (eMarketer) Facebook ad revenue will surpass $4 billion in 2011. (eMarketer) Twitter advertising revenue will surpass $150M in 2011. (eMarketer) Local Engagement Beware! Regardless of whether or not a national brand has actively engaged in social media, consumers are using it to talk about national brands and their local resellers often in a negative light. By engaging in social media, particularly at the city level, national brands can create place-specific communities where consumers can have personal interactions with the brand that are more relevant to their daily lives, and where the brand can monitor and manage their reputation. City-level sites also provide more avenues through which the brand can push demand-generation activities. While engaging in social media at the local level may seem daunting for a national brand, it is doable if they put infrastructure, processes and guidelines in place that support planning globally (by the national brand) and acting locally. (via affiliates or local community managers) Key facts/stats: 50% of Facebooks 750 million active users log into Facebook each day. (Facebook) More than 7 billion pieces of content are shared on Facebook each week. (Facebook) More than 24 hours of video is uploaded to YouTube every minute. (YouTube)
Local Web Planning Matrix Strategy and Impact for Addressing Local Web Ecosystem Elements
The following matrix provides a high-level view of the impact each element of the Local Web can have on improving local marketing. It also provides insight on what it will take for national brands to implement and manage Local Web elements near-term and long-term. Figure 4: Local Web Planning Matrix
LOCAL WEB ChANNEL ELEMENtS Co-Branded Local Websites IMPACt ON SuCCESSfuL LOCAL MARKEtINg? high INVOLVEMENt LEVEL NEEDED By NAtIONAL BRAND? high on the front end; low thereafter. AutOMAtED OR MANuAL ? WhO MANAgES ? hOW quICKLy DOES It NEED tO BE ADDRESSED tO OPtIMIzE LOCAL MARKEtINg?
Automated
National marketer on the front end; affiliate thereafter. National marketer provides ongoing content updates asneeded. National marketer on the front end; affiliate thereafter. National marketer provides ongoing content updates asneeded. National marketer on the front end; affiliate thereafter. National marketer provides ongoing content updates as-needed. National marketer and/or affiliates
Near-term; ASAP
Citysites
high
Automated
Near-term; ASAP
Promotional Websites
Automated
high
Automated
high
Automated
National marketer
Near-term; ASAP
high
Low to medium on the front end depending on quantity; low thereafter. Medium on the front end and ongoing
Automated
National marketer
Near-term; ASAP
high
Manual
Near- to mid-term for claiming sites; mid-term for establishing monitoring process Depends on brand strategy. Not urgent.
Location-Based Media
Medium to high
Low to medium on the front end; depends on brand strategy/campaigns thereafter. Medium
Manual
Daily Deals
Manual
Mobile
Medium to high on the front end; low thereafter. Depends on brand strategy
Automated
National marketer
Mid-term
Local Media
Manual
Affiliates
Medium
Automated
Manual
National marketers must train/coach affiliates or community managers who can then manage long-term
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Section 4: How Three National Brands Are Embracing the Local Web
Case Study #1: National Manufacturer Closes the Gap between their Brand and Local Dealers
Situation A national product manufacturer with an extremely well-known brand determined its brand and products were not well-represented online by local dealers despite a compelling, well-funded national advertising campaign and a strong manufacturer website with a find-a-dealer function that drove referrals to over 1,000 dealer websites every month. The manufacturer felt the lack of retailer effort in terms of providing online information about their brand and products was negatively impacting their national marketing efforts. They felt they were losing sales in the last mile of marketing when consumers were going online to research products and make decisions about where to purchase them in their local area. Solution The manufacturer turned to Balihoo for help closing the sales loop in the critical last mile. By investigating the manufacturers local retailer websites, Balihoo identified that these sites poorly represented the manufacturer because they provided too little information about the brand and products and did not highlight them in a way that stood out from low-cost competitive products that were featured on these sites. The dealer sites also were not well-positioned in local search results and were rarely optimized for lead generation. To resolve the problems, Balihoo implemented the following Local Web programs to increase the visibility of the manufacturers brand and product information among consumers in local markets: Built local websites for every dealer represented in the manufacturers dealer locator, using data provided by the manufacturer. Once the data was input, all of the sites were automatically generated and rolled out simultaneously. Each dealer was given the ability to co-brand and customize elements of their individual sites so they would feel comfortable that their local brand was also represented. Fully registered local dealers businesses and websites across all major search engines and directories for those dealers who chose to use co-op funds provided by the national brand for this purpose. Created and executed online advertising to drive traffic and leads to local websites for dealers who chose to participate in this program using manufacturer co-op funds. Results Each location for every one of the manufacturers dealers now has a high-quality, co-branded website optimized for leadgeneration and search. More than 70% of the dealers chose to apply the co-op funds provided by the manufacturer for local business and website registrations and local online advertising. Because of this, the national brand now has easy-to-access visibility into the results generated from these co-op investments. Thanks to the integration of the Local Web elements implemented through the program and the ability to track their results, the manufacturer has determined that more than 25% of the traffic to the local dealer sites is now being driven by organic search results. These are leads/visitors the brand and local affiliates were not capturing previously.
Case Study #2: National Medical Organization Cures Patient Leads with Local Websites and Integrated Ad Campaign
Situation A national medical organization needed to drive patients into their network of doctors across multiple cities in one of the countrys largest DMAs (Designated Market Areas). Because healthcare is fundamentally a local decision, they recognized they would need a solution specialized for geographic targeting to achieve the results they needed.
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Solution To solve the medical organizations unique challenge, Balihoo developed a custom solution consisting of the following Local Web elements: A series of city-specific and medical-specialty specific local websites that enable potential patients to find the medical organizations doctors regardless of whether they search for doctors based on the city they live in or the specialty they require (e.g. family practitioner, dermatologist, surgeon, etc.). In total, more than 2000 combinations were created for the single market area. An integrated ad campaign that crossed online, traditional and mobile media to drive traffic and patient referrals to the new highly targeted local websites. Results Through the combination of the local websites and integrated ad campaign driving traffic to them, the medical organization has seen a 6:1 ROI in the first 3 months of the campaign. This was three times higher than the 2:1 ROI the organization expected.
Case Study #3: National Insurance Provider Ensures Local Agents Are Covered
Situation A national insurance provider had invested significant time and resources into their web presence at the brand level, including PPC ads, SEO and registration. By all accounts, they were performing well they ranked highly across the board for both branded and category-level terms. However, Balihoo ran a local web assessment which quickly identified a major issue if a consumer searching on the insurance providers category added any geographic modifier to their search terms (e.g. city name, zip code, state), the insurance provider no longer showed up in the search results. Solution To solve their problem of being invisible in local search results, the insurance provider hired Balihoo to execute the following Local Web ecosystem elements on behalf of their affiliate agents across the country: Create local city sites for each city in which they operate, as well as co-branded local websites (microsites) for each affiliate agent. These sites address the insurance providers key business focuses in each market and center on driving leads into the local offices/agents. Balihoos technology automated the roll-out of the local websites, which are customized for each city and agent. Claim business listings and maps in major search engine directories Google, Yahoo and Bing, along with other online directories, such as Yellow Pages and CitySearch. Execute local online advertising (PPC, Facebook, and LinkedIn) to drive targeted local consumers to the local city and agent websites. Results Implementation for this program is still underway, but the insurance provider felt the need to move quickly to: Implement a Local Web pilot program that will take place in the fall of 2011, with over 100 customized websites being activated during the pilot phase. Once the pilot program is completed, the insurance provider expects to roll-out more than 200 additional city web sites to cover all geographies in the U.S., and up to 70,000 local agent sites to cover their entire base of agents.
Section 5: Conclusion
The Local Web Is the Linchpin to Effective Local Marketing; and Effective Local Marketing Is the Single Largest Opportunity for National Brands
The goal of this paper was to raise awareness of how critical effective local marketing is to the success of national brands and in turn how big of an impact the Local Web can have on increasing the effectiveness of local marketing. Balihoo believes the Local Web is the linchpin to effective local marketing, and that effective local marketing represents the single largest opportunity for national brands to drive top-line growth and reach consumers at the point where they are making final preference and purchase decisions.
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Clearly CMOs across the country agree. According to The 2011 State of Marketing report published by the CMO Council, the three critical areas of attention that lead the to do list of CMOs in 2011 are: 1. Multiplying Marketing Performance: The key management mandate to marketers is to drive top-line growth and market share while better defining the brand and value proposition. Marketers must move to optimize the marketing process in order to maximize business performance. Through new automated campaign and lead management tools, marketers can engage in highly interactive (and highly relevant) dialogues across multiple channels, reaching across social, digital, and traditional media channels. Connecting the measurements of these multiple channels is one of the key challenges marketers will seek to address in 2011. 2. Redefining Customer Experience: Marketing must redefine the customer experience, developing Web experiences that are highly engaging, personalized and differentiated. Marketers need to better understand the impact marketing and technology integration can have in making customer experiences more gratifying and satisfying, thereby improving loyalty, retention and repeat purchase. 3. Using Insight to Grow Brand Affinity: As marketers continue to engage with customers in instant, online social channels, gathering data from every impression, every search, every transaction, status update, or tweet can develop a more complete profile of the customer and must be integrated with offline data sources. Marketers must respond to the paradigm shift of BtoC to CtoB (i.e. consumers being in control of the way products are marketed to them) with reviews and reassessments of their marketing mix and allocation of spend. This includes greater use of localized marketing tools, masspersonalized messaging solutions, social media channels, and mobile relationship marketing platforms, among others. National brand marketers who want to increase revenues and extend their brand closer to the point of purchase decision should take a serious look at how they can increase their performance in the Local Web and close the gap on the last mile of their marketing.
About Balihoo
Balihoo is the premier provider of local marketing automation technology and services to national brands with local marketing needs. Balihoo enables enterprise-class marketing at the local level and gives national brands full visibility into all local marketing activities and results. Providing a combination of web-based software and services, Balihoo enables national brands to dramatically reduce marketing expenses and immediately increase local sales revenue. For local affiliates, Balihoo takes the complexity out of local marketing making it easy to quickly implement an expert, integrated marketing strategy that is consistent with the national brand. Let Balihoo help your brand assess its online local marketing effectiveness. www.balihoo.com
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