Determining The Most Effective Local Advertising Strategy

In today’s rapidly changing media landscape, local businesses of every kind are tackling the same challenge: how do we determine which advertising platforms to incorporate into our marketing mixes? The race is on, it seems, to see who can reach the greatest audience by creating the largest presence across print, online and mobile.

But while the tools available to deliver business messages to consumers are increasing, the key considerations have stayed the same. When it comes to measuring the effectiveness of advertising, return on investment (ROI) is the most important factor. Building brand awareness and market share are positive long-term goals, but growing a business requires a measured, tactical approach to advertising that is based mainly on turning a dollar of marketing money into a pile of sales revenue. Otherwise, the business won’t be around long enough to achieve its long-term objectives.

Before a conversation about advertising options can even begin, a local business must have a firm handle on three aspects of their operation: 1) demographics of their target customers, 2) geographics of their marketing area and 3) psychographics of their customers. These data play key roles in determining which marketing tools will make the most sense from an ROI perspective, so that businesses don’t waste valuable resources on offerings that won’t generate leads.

To help explain the importance of background research, let’s use the example of a new ice cream shop opening on the main street of a busy suburb. Here are the types of questions its owners should consider:

Demographics: What is the demographic profile of the local area? Let’s say there’s a large share of families with kids and college students living in dormitories. Based on that information, what customers will the shop try to attract – all of the above? Or just one of these target groups?

Geographics: What are the geographics of the area like? Are walk-ins mainly college students, while most of those driving to the store are families? How close are nearby competitors, and what demographics do they target? Depending on established competition, the initial target geography may be very small – requiring an even closer look at the demographic profile in the store’s vicinity.

Psychographics: What will motivate target customers to purchase ice cream from this shop? What are their spending patterns? What influences their buying behavior, and what specific promotional efforts will they respond to? While an ice cream shop’s business typically peaks in the summer months and drops off in the winter, do these rules apply in this particular area?

It’s only when the ice cream shop owners have firm answers to these questions that they can begin to map out an advertising strategy designed to deliver high ROI.

For purposes of this discussion, let’s assume the owners determined the following:

• They want to target both families and college students, and because of several already-established competitors, they’ll pursue potential customers within a half mile radius.
• Research shows that while the local student population includes frequent social med and mobile users, many of the local families spend less time with online and mobile technology.
• Indeed, many college students in the area walk to where they need to go, while families are more prone to drive.
• Summer months are busy with families, but college students go home for the summer.
• Disposable income is limited and price oriented stores do better than high-end establishments across both demographics.

Based on these determinations, the shop owner can work to develop a marketing strategy that will work to deliver quality leads for the business. Here’s a sample of how that might look:

• Due to differences in purchasing patterns, the shop will establish two distinct advertising strategies: one directed to college students and another to families.
• Since the shop is new, focused on a narrow area, and includes target customers with limited disposable income, coupons are determined to be an effective first step to get customers in the door.
• Because local college students are high social media and mobile users, a local coupon distribution channel on Twitter and a popular online mobile app are seen as effective, targeted delivery methods for coupons. Since these students are less likely to be in town over the summer—and summers are easier times to draw customers than the colder months—the majority of this marketing budget will be spent during the winter.
• Parents of families are also attracted to discounts, but those in this community are less likely to spend time finding them online or via mobile. Also, since most families in this area are drivers—they may need more incentive to travel to the store than the average college student who walks by it every day.  In this case, direct mail with coupons is seen as a good option in reaching local families.
• In addition to offering coupons, the shop owner can ensure additional referral business by listing the shop in print and Internet business directories.

While this scenario is hypothetical, it provides real lessons about the types of considerations local businesses must make when drafting their marketing strategies. There are an unlimited number of local advertising options out there—everything from Internet Yellow Pages to website creation and SEO/SEM visibility—but each individual tool may not be effective in delivering ROI in certain situations. In some regions or specific business categories, circumstances may apply that make it imperative for a local business to advertise in print directories—while in others, online directories plus a variety of additional digital tools may be considered critical to reach target demographics.

In the ice cream shop scenario, it may take years before the store establishes a reliable customer base and reputation. Once the store’s reach stretches beyond its initial half mile radius to compete with other shops and attract new types of customers, it will need new advertising strategies in order to maintain growth. At that point, its owners will need to go back through the steps of determining who their customers are at the time, where they’re coming from, and what motivates them to buy their products before changing or adding advertising resources. They must ensure that their local advertising efforts consistently deliver high ROI, or their efforts will be in vain and the business will suffer.