Borrell Associates, a market research firm based in Virginia, hosted a webinar this week to shine light on local business trends and what their spending might look like down the road. In addition to predictions on actual ad spend, they offered publishers insight to glean about tomorrow’s spenders.
Source: What 2023 Will Bring: Local Ad Spending Forecasts
The webinar, titled What 2023 Will Bring: Local Ad Spending Forecasts, opened with a look at some upward sales trends since the pandemic began, including general retail sales (above) as well as in categories such as liquor, hardware, and cars. With that foundation, Borrell Associates shifted the focus to small businesses, particularly business applications.
Corey Elliott, EVP of Local Market Intelligence for Borrell Associates, highlighted how the United States Census Bureau tracks new business applications, with its Business Formation Statistics able to segment those businesses that are highly likely to succeed and become businesses with payroll. “Ones that the government says, ‘yeah, these guys are going to turn into something,’” Elliott says.
Source: What 2023 Will Bring: Local Ad Spending Forecasts
Their chart shows that 6.2 million high-propensity businesses have been created since the pandemic began, a significant increase from the period prior. “Every quarter, there are hundreds of thousands of business applications of high-propensity businesses coming into the government,” Elliott says, “and that’s significant. A lot of times, those small businesses aren’t seen right away by a typical media company or a typical agency.”
Gordon Borrell, CEO of Borrell Associates, said these businesses show a reverse trend from what happened during the 2008 recession. “Now, we’ve not only got an increase, which is the opposite trend, but also a significant increase,” Borrell says.
Smaller businesses with less than 10 employees, according to Borrell Associates’ Spring 2022 survey, are less established than those with more than 10 employees. Whereas 53% of the smaller subset have been in business for more than 15 years (and 22% for less than 6 years), 81% of the larger subset have been in business for more than 15 years (and only 6% for less than 6 years). Being less established, of course, also means less experience.
Source: What 2023 Will Bring: Local Ad Spending Forecasts
“They’re an expert plumber, expert electrician, expert home-improvement guy, expert insurance sales, whatever it is that they do,” says Borrell, “but they’re not [an] expert at marketing. … So the ones that are novices, it’s actually good news because it will be easier for you to convince them to do business with you and that you can help them.”
Borrell Associates’ research showed that while smaller businesses buy fewer types of media — the less-than-10-employees subset average 4 types of media purchased vs. the 7 types of media purchased by the more-than-10-employees subset — they spend a larger share of their gross income on advertising, averaging a $27,836 budget.
“These are businesses … that are not on your radar,” Borrell says. “They’re invisible. These are businesses that you don’t see because most of what they’re doing probably is establishing their businesses — maybe setting up a Facebook page, maybe buying paid search — and they are ready.”
Perhaps most promising for publishers in particular is that these small businesses buy digital from traditional media companies, with the largest slice (36%) going to newspapers.
Source: What 2023 Will Bring: Local Ad Spending Forecasts
Overall, Borrell Associates’ forecast for 2023 is a 3.2% increase in local advertising, with a 7.7% increase in digital formats and a 5.9% decrease in non-digital formats. How they foresee that overall 3.2% increase spread out across media can be seen in the chart below, with newspapers going down 7.1% and other print staying right where they are.
Source: What 2023 Will Bring: Local Ad Spending Forecasts
“It might be the first time that we’ve seen something in print not negative, technically,” Borrell says. “The newspaper number? While 7% is not good, that’s actually a lot better than what we had seen in the last couple years.”
Digital, they say, will account for $7 of every $10 spent on local advertising; in 2016, only $4.50 was spent on digital. And with that much money potentially on the table, CEO Gordon Borrell has advice for those not up for the hustle.
“If you’re all saying, ‘Oh hell, I don’t want to go after businesses with 8 employees or 4 employees’ or something like that, stop that snootiness,” says Borrell. “These might be the new startups.”
SEE FOR YOURSELF
The Magazine Manager is a web-based CRM solution designed to help digital and print publishers manage sales, production, and marketing in a centralized platform.
