How Local Advertisers’ Best Customer Acquisition Sources Have Changed in the Past 5 Years

December 8, 2016

borrell-local-advertisers-top-sources-new-customers-dec2016Referrals (66%) and company websites (47%) continue to be the best sources of new customers for local advertisers, much as they were back in 2011, according to a new report [download page] from Borrell Associates. However websites have declined as an effective source over the years, and are now being challenged by social media, per the report.

In fact, the share of local advertisers citing social media as a leading source of new customers has more than doubled over the past 5 years, from 21% to 44%. During that time span, social media has become more valuable than events, newspaper ads and email marketing in the eyes of local advertiser respondents.

These results are to some extent mirrored by consumers’ own viewpoints. MarketingCharts’ recent study of purchase influencers has found a rather dramatic climb in the stated impact of social media advertising over the past couple of years, with social ads now second to TV ads among paid media for Millennials.

Interestingly, local advertisers seem to be finding more effectiveness from TV ads today than they were in 2011: 17% cited TV advertising as a leading source of customer acquisition, up from 11%. TV is the only traditional advertising medium to see a significant uptick during that period, with newspapers suffering a steep decline (24%, down from 40% of respondents), direct mail also falling, and radio, magazines and outdoor each remaining relatively stable.

Online ads are also climbing: with more than 1 in 5 local advertisers now reporting them as a leading source of new customers (up from 10% in 2011), advertisers are almost as likely to find success through online ads as through email marketing. That’s a somewhat surprising result given the ongoing accolades given to email, its continuing popularity with consumers, and research suggesting that its the top digital medium for SMB retailers. (It may be that email’s influence is a little understated given that the sample is local advertisers – and that email’s impact may be stronger for customer retention than acquisition.)

Meanwhile, although mobile marketing and advertising was not singled out in the Borrell Associates report, new data from BIA/Kelsey indicates that hefty spending increases on local mobile advertising are ahead. In its latest forecast, BIA/Kelsey notes that mobile is the fastest-growing location-targeted medium, predicted to grow from $12 billion in location-targeted spending this year to $32 billion in 2021, for a compound annual growth rate of 21%. Some 38% of mobile ad spend this year is expected to be location-targeted, increasing to 45% by 2020.

About the Data: The Borrell Associates results are based on a survey of 7,564 US businesses that purchased local advertising this year. The survey was fielded from April to August 2016.

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