Whether local media was asleep at the wheel, too small to compete with the digital giants or thought their kingdoms were unassailable, the share of obtainable digital ad dollars available to them continues to dwindle. Nonetheless, there are some strategies they can initiate to regain some of that revenue.
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According to Borrell Associates’ 2nd Annual Benchmarking Report (April 2024), “Entering the Last Phase of Local Media's Digital Transformation,” local advertising spending on digital media will exceed $100 billion while local legacy media (print, radio, TV and cable and outdoor/other) won’t exceed $20 billion each. Since 2014, digital media spending has vaulted ahead of print, radio, TV and cable, all in the $30 billion range each.
Borrell forecasts local digital media spending will increase to almost $120 billion by 2027. By comparison, print, radio, TV and cable will decrease to approximately $17 billion each. The outdoor/other category will increase very slightly.
Digital media domination in local ad spending bears some responsibility for another challenge for legacy media ad sales, as Corey Elliott, executive vice president of local market intelligence at Borrell, explained. “In 2019, we asked local advertisers how often they dealt with a sales rep when businesses bought advertising, and 7% said ‘never.’ Four years later, the ‘nevers’ increased to 20%.”
“Our 2024 report shows local advertisers dealt, on average, with four local media companies within a year, with a median of two, and the most frequent answer was one. In 2016, local advertisers said the average was six local media companies.”
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If there is any good news in these numbers, its local digital media’s YOY growth rate will decrease from 5.8% for 2024 and each subsequent year to 2.9% by 2027. That’s little solace for local legacy media as its biggest challenge is clawing back some of the digital ad dollars going to Google, Meta and all the other digital media giants.
Newspapers may be better positioned for the digital advertising transformation.
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The Borrell report also reveals interesting data about local newspapers and their efforts to generate more digital ad revenue. Although newspapers’ share of core 2023 ad revenue was $5.0 billion compared to radio at $7.3 billion and TV at $9.0 billion, newspapers’ share of digital ad revenue was significantly more: 45.5% compared to radio at 21.0% and TV at 16.9%.
Another comparison shows local newspapers have more balanced revenue sources than the other legacy media.
“It’s balanced now, but print subscriptions and print advertising totaled 55%, and digital subscriptions and advertising 45%. That’s still a good chunk and more than radio. Newspapers had a head start on those pesky up-and-comer radio stations, but newspapers must understand that print revenue from subscriptions and advertising will continue to dwindle,” Elliott said.
Another positive for newspapers is they are third on a list of media companies from which local advertisers buy their digital advertising at 27%, but considerably fewer than Google at 39% and a social media company at 59%. More significant percentages of local ad agencies buy digital advertising from a social media company at 75% and Google at 68%. Although newspapers are sixth on the list, they are where 41% of local ad agencies buy digital advertising. Newspapers are tied with broadcast TV stations at 41% and slightly behind radio at 42%.
Strategies for local legacy media to grab more digital ad dollars
Despite these challenges, there are strategies local legacy media can implement that have the potential to stem the outflow of local digital ad dollars from their markets and add those dollars to their coffers.
Strategy: Media sales reps evolving into marketing consultants
Local ad sales reps must understand digital media as well as the media they’re selling. They must also adjust their mindset about other local media. They are still competitors, but they can also be collaborators. Reps must demonstrate a comprehensive knowledge of the local media landscape — and as blasphemous as it might be — recommend other media to advertising prospects. Multiple Borrell surveys reveal that is what local advertisers want from ad sales reps.
More local media companies are realizing the importance of sending a team of marketing consultants into the market instead of sales reps. The new Borrell survey asked local media companies what would make them more competitive, and 37% said, “Build our sales reps' marketing expertise,” which was the first of four answers.
“They can leverage two things that will be harder, but not impossible, for local advertisers to accomplish: intelligence about the local market and why it is uniquely coupled with marketing savvy,” Elliott said.
Two advantages that local media reps (marketing consultants) can emphasize when pitching a prospect are they know the market better than any outside digital media entity. Because of that knowledge, they can show advertisers how to integrate legacy and digital ad buys for maximum effectiveness.
Strategy: Emphasizing Americans’ preference to obtain local news from digital channels
Newspapers’ primary product is news with a sprinkling of entertainment, while radio and TV's primary products are entertainment and some news. According to the Pew Research Center’s May 2024 report, “Americans’ Changing Relationship with Local News,” 48% of surveyed adults said they prefer obtaining local news from news websites (26%) and social media (23%). Television remains first at 32%, or nine percentage points fewer than in 2018, while news websites and social media shares have increased since then. Radio had a slight bump from 8% to 9%.
“Not many people are going to radio for news content as they do to newspaper sites in the information and data I see. Newspapers can sell digital advertising because their asset is ready to go, and people are going to it. Local newspapers are not just offering a banner on their website; they’re offering digital services to build an overall marketing campaign for advertisers. That is the key,” Elliott said.
Strategy: Helping local advertisers benefit from generative AI
Although Borrell did not include data in its report about the use of generative AI in local marketing, Elliott thinks there are opportunities for media sales reps to enhance their marketing consultant role. Local advertisers with the most marketing savvy were more interested in local media helping them use generative AI for creative concepts and ad copy. Advertisers with less marketing savvy and understanding of generative AI are more likely to seek help in targeting — creating an opening for reps with generative AI knowledge.
“The master marketers said they were concerned that generative AI wouldn’t know about the nuances of the local market. This is an opportunity for media reps with proven marketing skills to pitch to advertisers. Those advertisers want to know reps who know the market, and who knows the market better than a local media company?” Elliott said.
Strategy: Adopting new digital ad tools
As local media added websites, social media and other digital platforms to engage with their audiences, those platforms also became new advertising opportunities for local businesses and revenue-generating opportunities for media. In many cases, however, the ads appearing there were usually digital versions of the ads in newspapers or on radio and TV.
New digital ad tools are available for local media and their advertisers. Because they are affordable and easy to use, media companies can attract very small businesses without the budget to benefit from traditional ad placements.
These include Broadstreet’s Local Spotlight tool. Publishers can offer advertisers simpler directory or classified-style ads run-of-site (ROS), all from a complete self-serve system that only requires one staff member. Mesearch/OwnLocal is a collaborative effort with Trib Total Media that allows local advertisers to create custom sponsored content from an AI-based mobile app.
Bob Sillick has held many senior positions and served a myriad of clients during his 47 years in marketing and advertising. He has been a freelance/contract content researcher, writer, editor and manager since 2010. He can be reached at bobsillick@gmail.com.
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