Ad Spending Uncertainty Opens Door for Local Media Sellers.

In a possible opening for media ad sellers, newly released survey data from Borrell Associates shows that six in ten local business ad buyers lack confidence in the amount of money they are spending.

The firm’s spring survey of small and medium-sized businesses finds 41% of spenders think they are spending the appropriate amount on advertising. The remainder has varying levels of doubt. That includes three in ten who say they are probably putting too little money into marketing, which is twice the number that thinks they are overspending on advertising.

“It’s one of those pain points for local businesses that any well-trained rep can turn into a sale,” says Center For Sales Strategy CEO Matt Sunshine. In Borrell’s summer chart-of-the-week series vlog post, he says that the key for sales reps is approaching the situation as an educator more than a seller. “A lot of advertisers aren’t exactly in a position to figure this out themselves. They really need your help,” Sunshine says.

Borrell’s survey finds just one in five (22%) of local ad buyers believe they are under-investing in marketing to change based on current business conditions. While roughly a third say it’s their “gut instinct,” most are focused on factors related to how they are measuring the effectiveness of their spending or other benchmarks unrelated to the economy or the company’s own sales.

The survey finds that nearly half (45%) conclude that they’re putting too little into advertising based on a comparison to what their competitors are spending. In a related number, 19% say they think they are losing business to competitors that advertise more. Nearly four in ten (38%) say they aren’t getting enough leads or business growth. And 10% say they have failed to gain traction from new product and service launches without the required level of marketing spending.

Borrell’s data shows some local buyers also have doubts about previous efforts. It finds 38% blame higher advertising costs for their company’s underspending, while 11% say they failed to see a big enough return on investment from previous campaigns. It also shows broadcast account reps likely have some allies inside the companies, as 6% of local buyers say they have heard complaints from their own sales teams that they need more marketing support.

In a report released in May, Borrell said there has been a profound change in the face of advertisers on Main Street. Old clients may not have survived the pandemic, and there are a lot of new small and medium-sized business in operation in their place. That opens up new sales opportunities for radio stations.

“While economic downturns also trigger business failures, the net number of businesses didn’t decline during the pandemic. In fact, growth accelerated, resulting in a record number of SMBs year after year,” Borrell said in the report.

Most critical for radio is that these young new retailers, restaurants and other local businesses are twice as likely to be increasing their spending on radio. Borrell’s data reveals that 14% of the small businesses that have opened since 2020 plan to hike their radio ad spending this year. That is double the 7% of businesses established prior to 2020.

Just as positive for radio is that the Borrell survey finds this new crop of local small businesses are more likely to plan radio ad budget increases than to plan on directing more money into television, print or direct mail. The only area where more new businesses plan to hike their marketing spending is on events and sponsorships, which creates another opportunity for local radio stations, as they are often the creator of events in their local communities.