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Local Agencies Are Podcasting’s Hometown Allies, New Survey Shows.


Local advertisers remain a distant second to national brands for podcasters, but as the industry matures and becomes even more mainstream the Main Street opportunity is expected to become more of a focus. A new survey of local businesses and the ad agencies that work with them by Borrell Associates shows it is agency buyers that will likely lead the way.


A majority 53% of local agencies say they are seeing growing interest in streaming audio, including podcasts, among their clients. That makes it one of the media that is seeing the most growth in interest, with only streaming TV, social media, and search engine marketing capturing more attention among local clients according to buyers.


Audio is already high on the list for local ad agencies. Borrell says AM/FM radio is the medium most used by local agencies with 78% reporting they buy ads on broadcast radio. Streaming lags, but already a majority 56% of local agencies say they are already buying streaming audio advertising. That puts it slightly behind cable television, but ahead of local newspapers.


Where podcasting lags is with the local businesses themselves, which is likely a function of how few salespeople are approaching people on the local level. Borrell’s survey of local businesses shows 15% report they are buying streaming audio ads, including podcasting, but the dollar figures are relatively small. The average spent by local businesses comes in at $18,307 per year. That compares to an average $34,167 that is spent each year on broadcast radio.


“Podcasting is getting really big, and streaming audio is really big. It's just not at the local level,” Borrell Associates CEO Gordon Borrell said Thursday during a webinar presentation of the results. “Very few local advertisers buying any type of streaming audio ads doesn't mean it's not effective. It just means it hasn't really caught on. And there probably isn't a great deal of locally targeted programming for an advertiser to purchase inventory. But the agency's pretty hot on it.”


The biggest indicator of which way local podcasting ads are going comes from the broadcast radio companies. Not only are they delivering some of the strongest results in terms of revenue for their podcast units, but some companies are also pivoting to capitalize on the opportunity.


After it launched hundreds of locally-focused shows, Cumulus Media said last year that it would begin to put more emphasis on local podcast creation and ad sales to leverage its portfolio of 404 radio stations across 85 cities. CEO Mary Berner said in April that they have had some success by taking podcasts produced by its sports stations in Dallas and Detroit. But she also said the company is “walking before we run” as it makes more investments.


“We're seeing initial success there because listeners want to hear from our talent, and it is a way also to extend the content that they hear on air. So that is an area of focus,” Berner said. She added that there has also been buy-in from local stations. “Many of our programmers would very much like to do podcasting,” she added.


Cumulus Media says its podcast revenue increased one percent during the first quarter. But that slower growth number reflected a slowdown in national sales, which Berner said have been “a drag” on the company’s overall digital revenue growth.


The prospects for streaming audio ads among the local businesses to grow is positive. Borrell says eight percent of those surveyed plan to start buying it or increase the amount they allocate to the medium. That is compared to two percent that plan to scale back or eliminate their streaming audio ads.


Borrell’s biannual research, solicited through the client/prospect lists of media companies, included two separate surveys: one of direct buyers with 1,983 respondents and one of ad agencies with 359 respondents.


Local direct ad buyers spend an average of $128,300 annually on all advertising, or about 4.6% of their gross revenue. Yet well over 50% of respondents are spending less than two percent of their gross revenue on advertising. Borrell called that an opportunity for media sellers.


“It's remarkable to me they can stay in business spending less than two percent of gross revenues on advertising. That’s probably why their business is shrinking, or at least flatlined,” he said. “It's a big opportunity here to convince advertisers that you are a marketing expert, you have some information that can help them, and advertising is an investment that is going to help their business grow.”

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