Malcolm Gladwell is an author, pundit, and Carrot Top doppelganger who doles out bite-sized business wisdom like popcorn chicken. He posits in The Tipping Point that when enough of the right people start to perpetuate a trend, it can catch fire and grow geometrically almost overnight. 2006 will be the year that local online advertising experiences this tipping point phenomenon.
On a national level, online advertising is rebounding like Dennis Rodman, with overall ad spending up to a projected $11.2 billion in 2005, headed toward $18.5 billion in 2008, according to eMarketer. Huge traditional advertisers like Ford, McDonald’s, and Proctor & Gamble are moving marketing dollars toward online initiatives.
But locally, despite impressive year over year growth rates (46% increase in 2005 predicts Borrell Associates), online advertising remains somewhat of a novelty. Not the “Potato Chip That Looks Like the Virgin Mary” novelty it was just a few years ago, but there are still dozens of major Arizona companies that advertise offline, but have yet to dive into the online ad baptismal.
In fact, according to a comprehensive Borrell Associates survey, the Phoenix metropolitan area ranks just 29th in local online ad spending, but is the 15th largest media market based on Arbitron data. This means of course, that when it comes to local online advertising, Phoenix is getting beaten out by the likes of Albany (12th), Tampa (17th), and Hartford (26th). Tucson is the number sixty one media market, but is just 93rd in local online ad spend, falling behind Waco – ouch.
Hartfordians better watch their backs, however, because this is the year that Arizona gets serious about online advertising.
The word is out about Arizona. Service businesses, franchise eateries, and new companies of every shape and description are moving in to grab their piece of the massive growth in our state. Old line Arizona companies will increasingly find themselves under siege by hungry, clever competitors whose tactics go well beyond creating name recognition through hollow, repetitive broadcast ads.
The comparatively low cost of Internet advertising, combined with the ability to precisely target prospective customers and measure results definitively will make it the marketing weapon of choice in competitive categories.
Many Arizona companies – new and old – are mid-sized. Most don’t have large, centralized marketing teams, relying instead on a mix of in-house personnel and outsourced expertise. Consequently, the advertising decisions of major local advertisers are significantly influenced by the opinions of their ad agencies.
In the past two years, most ad agencies in the state have added online capabilities or at least a partnership with an interactive firm. Historically, most of those capabilities have centered around Web site design – the showiest part of the business – but several sources in the online ad business say that recently major agencies have emitted sincere-sounding oohs and aahs about serious online ad programs for their clients.
Also fueling the local online ad boom in 2006 is the proliferation of legitimate sites on which to advertise. The Arizona Republic’s azcentral.com has long been the dominant local Web site on which to advertise – with some competition from Channel 3’s longstanding azfamily.com. Now, however, broadcasters have figured out what Channel 3 learned long ago – a good Web site generates revenue. Note the revamped or expanded sites from KNXV (abc15.com), KSAZ (fox10.com), KPHO (kpho.com), KASW (quick6.com), the various Clear Channel Radio sites, and KTAR (ktar.com).
All offer good online ad opportunities on sites that were once collectively a waste of good pixels. Plus, each of these sites have charged their sales teams with pushing online ads, and many have tied part of sales reps’ compensation to online sales success.
This combination of increased business competition, Internet savvy agencies, improved local Web sites, and motivated salespeople will combine to create a state-wide culture that finally puts the emphasis on Internet advertising that we’ve lacked for too long.