Commentary

Publishers Can't Afford To Ignore Local Advertisers

Programmatic has created efficiencies in the media-buying process that have opened up compelling revenue streams for publishers.

That’s why I was surprised when several publishers recently came out against programmatic technology, including some who are doubling down on strategies to eliminate programmatic ads altogether, like those mentioned in this Wall Street Journal post.

"These newer Web publishers are particularly guarded against third parties selling their ad space or accessing their audience data. They aren’t against more automated ad buying and selling, per se, but they are generally not so interested in partnering with ad-technology vendors just to earn a few more cents for every banner ad they sell or person they target," writes Mike Shields.

But programmatic isn’t going away, and eschewing it also means giving up a significant and fast-growing market: local advertisers.


Small and medium-size businesses (SMBs) are a key pillar of the U.S. economy, together accounting for over 50% of non-farm GDP. According to BIA/Kelsey, local businesses spent more than $140 billion on advertising in 2015, including roughly $38 billion on digital, which represents by far the fastest growing segment of local advertising. But some digital publishers are ignoring this critical source of revenue by choosing to forgo the technology that makes it possible.


The Internet Turned Local Advertising on Its Head

Pre-Internet, local advertising was simple. Newspapers, radio and TV stations served the communities that advertisers wanted to reach. Now those audiences are consuming content through a variety of channels, and advertising budgets are following.

But simply migrating those dollars to the corresponding websites and mobile apps produced by those same local media companies isn’t sufficient. With the fragmentation of viewing across tens of thousands of brand name and enthusiast properties, local businesses need to reach potential customers where they are — and that isn’t necessarily locally-focused publications.


Everybody’s Local Somewhere


With programmatic, publishers serve ads based on the location of the consumer, rather than the publisher—targeting local audiences through national and global websites, as well as mobile and connected TV apps. Programmatic is the only viable way for local businesses to reach these fragmented audiences, which is why Borrell Associates estimates that by 2019, 61% of local digital ad spending, or $47 billion, will be conducted programmatically.

Programmatic converts the global reach of the Web into lucrative local audiences. Global publishers can serve geo-targeted ads to visitors at premium CPMs, while local publishers can continue to display relevant ads to all visitors, wherever they are.


Local Advertisers, Lucrative Revenue


The fact is, publishers are struggling to compete for audiences in an increasingly crowded media landscape. Those who choose to eliminate programmatic advertising will be doing themselves more harm than good. For most publishers, survival means delivering the most valuable impressions possible—and without programmatic, they’re missing out on a huge chunk of the market.


It’s not just SMBs that are looking to make a local impression. Major brands are also keen to zero in on local audiences. This year their localized advertising spend will balloon to $61 billion because marketers see higher ROI using geo-targeted campaigns, which tend to outperform national campaigns, both online and offline.


Programmatic advertising isn’t perfect, and our industry needs to continue to work to improve its efficacy. But betting against programmatic is shortsighted, and missing out on local advertisers is one of the reasons why.

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