AT&T study reveals spending patterns of local advertisers

Communications giant AT&T, which among many things publishes Yellow Pages directories, has released a study that concludes (and this will floor you) most small-business owners see directory advertising as their most effective marketing tool.According to the survey of 1,000 businesses with 25 employees or less, nearly two-thirds (63%) still advertise in a printed directory, reports MediaPost.

In addition, 72% of those small businesses said they would spend the same amount on printed directory advertising in the coming year. Eleven percent said they would spend more. Nineteen percent said they would spend more next year on newspaper and magazine ads, which were cited as the second-most effective marketing tool by the small businesses.

While only about 23% of the respondents said they currently use online advertising (and two-thirds said they have their own Web sites), some 53% of them said they expected to buy online advertising featuring video over the next two to three years, according to the survey.

“Small businesses still see strong value [in directory advertising], but they’re also eager to get online,” Bob Mueller, executive director of business operations for AT&T, tells Marketing Daily. “The fact is, consumers are using all sorts of places to get their local information.”

Given who funded the study, results that show a bias towards directory advertising would not seem terribly shocking. But the story says AT&T contracted Western Wats Data Collection Agency in Utah to conduct a fully neutral survey.

The small-businesses survey is intended to back up research from The Kelsey Group, in which 61% of Americans say they still use a printed directory to find local information, Mueller says. That survey found that 13% of consumers used search engines to find local information, while 7% used Internet directories (e.g., Yellowpages.com).

I relate this because we’re all hearing from entrepreneurs looking at intensely local advertising as a different angle for ad-supported screen networks, borrowing on what companies like Danoo and Ripple are doing in the US. It can be a tough, tough slog because small businesses usually allocate very little of their budgets to advertising, they take as much effort or more to sell to than much larger accounts, and they’d rather do a barter deal than fork out cash.

I could probably build out a hell of a network if all I wanted was to eat free for the rest of my life.

Not surprisingly, the study showed the top five categories for directory searches are: restaurants, physicians, auto parts suppliers, auto repair shops and pizza. I think the othe category that doesn’t come up, but would be strong for local digital screen advertising, is real estate, both for agents and for mortgage brokers and related services.

It is intriguing that more than half saw themselves buying digital ads featuring video in the next two or three years. That sort of work could easily make the leap to our medium, though I wonder how many even gave a thought to production costs.

I like the hyper-local ad screen model and have some clients looking seriously at that, but it’s no walk in the park. As the study shows, the money that is out there won’t move easily away from established mediums, and each win will be hard-fought.

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2 Comments on “AT&T study reveals spending patterns of local advertisers”

  1. Rob Gorrie Says:

    The local sales side of this business is so important and while it’s a tough slog and as much as everyone wants the national ads, the way to make your network successful is having effective local sales – once you have this everything else is gravy. Everyone has to do it.

    FYI Dave, we took a look at the real estate side of things as my buddy owns a big one in Canada and for the effective localized reach they need, the real estate biz is a tough one…each agent, unless they are very successful, doesn’t actually spend enough a month on ads to make it effective…I thought it would be a slam dunk too but you’d need to set it up as a coop program and maybe even just sell the channel as a whole to multiple brokers and maybe multiple companies and intersperse/share the aggregated ads…not to say you won’t get some on board but…

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