Borrell Associates presented the results of its fall 2022 survey of ad buyers Tuesday, offering a peek into how advertisers and agencies sized up the local media they used this year and what they have up their sleeves for 2023. The good news for radio came in the form of high usage and effectiveness ratings from both camps.
Among direct buyers, 43% of survey respondents said they are using radio and 35% rated it as very or extremely effective. That puts radio in the upper right quadrant of Borrell’s schematic, meaning it ranks high on the metrics tracked along both the vertical axis (usage) and horizontal (effectiveness). In fact, radio is the only traditional media to make this grade, sharing the upper right quadrant with three digital media along with event marketing. “Those are the ones that are being used a lot and scored high in effectiveness,” Executive VP of Local Market Intelligence Corey Elliott explained during a webinar.
Streaming audio, which includes streaming audio pureplays, the online streams of AM/FM stations and podcasts, placed its dot in the lower left quadrant, meaning low usage and low effectiveness scores from direct buyers. Why the lackluster performance? Elliott chalked it up to low awareness among local direct ad buyers. Citing a survey Borrell conducted at the beginning of 2022, Elliott said “the number one reason that local advertisers say they're not buying streaming audio is nobody's pitched me that. They also have the perception that it's too expensive.” Another reason cited in the earlier survey: local direct buyers don’t know how to buy streaming audio. “There's a lot of interest in it, but also a lot of ignorance,” Elliott concluded.
Back to the fall 2022 survey, radio also scored high in both usage and effectiveness among local ad agencies. About 68% said they’re buying it and roughly 45% rated it as very/extremely effective. Streaming audio performed significantly better with agencies – about 51% said they’re buying it and 41% rated it as very/extremely effective. CEO Gordon Borrell attributed the difference between the two groups to marketing experience – 86% of agency respondents have more than 10,000 hours of experience with advertising or marketing under their belt, compared to only one-fourth of direct ad buyers. “We know that the agencies spend a lot more time in marketing full time so they're more masterful at marketing, and that impacts their perception of what works,” Borrell said.
The survey found that 43% of direct buyers use radio and spend an average of $24,173 on the medium. That puts radio in sixth place in average annual spending amount per advertiser among 20 media channels surveyed. For the first time in 13 years of conducting the survey, TV doesn’t occupy the top spending spot. It has been usurped by Search Engine Marketing at $58,907.
As seen in earlier Borrell surveys of advertisers, there has been a shrinkage in the number of media companies that local ad buyers use. “The pack is beginning to get thin,” Borrell said. “They've whittled it down to three,” which could be a combination of a radio station and a couple of TV stations or one of each and a local newspaper.
Narrowing the scope to just digital investments, Borrell found 53% of advertisers are buying digital advertising from a local media company. Radio came in fourth out of 10 media outlets surveyed with 27% of direct ad buyers purchasing digital ads from a radio company.
Looking ahead to the new year, direct ad buyers are planning to broaden their usage of virtually everything in 2023, including radio – 43% said they’re currently using AM/FM, 45% said they plan to buy it in 2023. Taking a closer look at their 2023 media plans, the survey shows 9% of direct buyers plan to increase or start buying radio next year, the exact same percentage that plan to trim or eliminate it. That even-Steven performance contrasts with social media, where 28% plan to increase or start using it and 6% expect to trim or eliminate it. The inverse is true for print publications –a larger percentage intend to cut or drop than increase or start using newspapers, magazines, other printed publications and printed directories.
Fielded Sept. 3-Nov. 16, Borrell’s fall 2022 advertiser survey includes completed surveys from 359 local ad agency respondents and 1,983 direct buyers. What do they look like? Eight in 10 direct local buyers are independent companies with about $3 million in gross revenue. Typically exceedingly small businesses, three in four direct buyers don’t have a great degree of marketing experience, suggesting they need and/or want help. They spend an average 4.6% of their gross revenue on advertising but 72% spend less than 3% of gross revenue on advertising.
Borrell said the guidance they give businesses is that putting 3% to 4% of gross revenues into advertising will deliver tepid results. “If you want to grow, it's got to be above that and if you want to really aggressively grow, it's 10% to 15% of total gross revenues,” Gordon Borrell said. For new business just getting out of the gate, the recommendation is 20% of gross revenue spent on advertising.