Market Focus: West Coast
The three states that constitute the U.S. Pacific coast—California, Oregon, Washington—are remarkably disparate, culturally and commercially, providing media buyers with numerous opportunities for regional online plays. California features twin hubs of media activity. Los Angeles is certainly foremost in traditional media, while San Francisco plays host to many firms in the vanguard of online innovation. San Diego, Portland, and Seattle offer smaller scale opportunities, but it should be noted that consumers of mid-sized cities may be more easily reached by geo-targeting.
The Gartner Group research firm’s September 2000 report on regional e-commerce opportunities reveals that the Pacific region, with 15 percent of the U.S. population, features the second highest average household income ($53,500) of nine regions profiled. The Pacific states also rank second in household PC penetration, at 67 percent, well above the 59 percent national average. The region ranks first in two of the report’s household measurements: in Internet access, at 56 percent, and in terms of households generating income through managerial or professional jobs, at 33 percent.
In online buying and shopping behavior, the Pacific region ranks second in shopping, at 45 percent, and first in online buying, at 34 percent. Thus, it is no surprise that the thriving west coast offers ad agencies multi-tiered regional buying opportunities. But considering the skittish mood of advertisers in the digital realm, do regional plays make sense in the short term?
According to Tim McHale, chief media officer for Tribal DDB WorldwinBu2C regional online plays “have not at all been exploited to their potential.” Two of McHale’s clients, Pepsi and Sony, have forayed into the regional online ad space. Moreover, overall, he indicates, “our clients will spend more this year than last year.”
McHale adds that “we have two other clients that have done seven-figure strategic alliance deals with AOL, Yahoo!, MSN, and others.” Those commitments represent about 35 percent banners and buttons, 20 percent email marketing and data collection, and 45 percent in content—contests and sweepstakes. For research, Tribal relies mostly on information gleaned from server logs, from which impressions can be broken out based on specific area codes.
Online, ads for certain types of businesses fare better than other types. Auto dealers are a paradigm of the type of business that benefits from regional ads. Selling what are essentially high-priced commodities out of brick-and-mortar locations, aggressive advertising often determines success. In the capital of car culture, Los Angeles dealers benefit from some of the nation’s most vigorous competition in local television news. Four stations, KCAL (www.kcal.com), KTLA (www.ktla.com), KTTV (www.kttv.com), and KCOP (www.upn13.com) vie for millions of southern California viewers who prefer the quirky presentations of local newscasters to the homogenized discourses of the networks. Socaltoyota.com is an example of a dealership association that runs banner ads at websites for regional TV stations. With click-throughs to 57 dealer sites, model descriptions, and Internet specials, among other offerings, this consolidated effort typifies an effective regional play. GM and Hyundai also display banner ads on L.A. TV station websites.
Buyers zeroing in on first tier (Los Angeles, e.g.) cities’ sites should be careful about throwing too wide a net over potential customers. Los Angeles County, vast by East coast standards, is too large for a business on one border of the county to draw customers from the other end. Only the most specialized (Ferrari?) products might prompt exceptions. Second tier (Portland, Seattle, e.g.) and third-tier (Santa Barbara, Tacoma, e.g.) towns might be better bets, as a ride across such towns would not inconvenience most consumers.
Other west coast businesses with brick-and-mortar profiles can be found online. These include real estate companies, employment agencies, electronics stores, cellular telephone outlets, and banks such as Hawthorne Savings, which runs a banner ad in AOL’s Digital City (Los Angeles).
Heidi Browning, associate media director in the San Francisco office of the CyberSight agency, reports that her clients are likely to run regional online spots if they have brick-and-mortar locations within a territory. “These are mostly financial institutions, packaged goods companies with promotions specific to the region. Leveraging brand names is what it’s about. Conversion rates have been more than twice as high with some of our geo-targeted efforts.”
For products and services that might sensibly be sold outside a given locality, McHale says that “local radio and TV station sites may provide a national reach, even though they are recognized on the west coast only. Digital cities are another way to address the market, although the number is shrinking.”
Most of the higher profile alternative websites are also linked to publications, including the City of Angels’ L.A. Weekly (www.laweekly.com), Seattle’s The Stranger (www.thestranger.com), and Washington Free Press (www.speakeasy.org/wfp/).
As to analysis of ad results, McHale believes in “using a third-party server, otherwise it can become a nightmare later on when you try to provide reconciliation, verification, and thus gain insight into what works and what does not.” McHale stresses that the reporting mechanism is as important as the campaign itself. He mentions DoubleClick and Ads 24/7 as proven third-party server companies.
Freelance writer John Hallenborg can be reached at email@example.com.