• by Laurie Sullivan  @lauriesullivan, August 15, 2014

The shift in ad spend continues to move from local to national media, based on the size of businesses and the number of employees. Although it has become difficult to tie directly to growth trends, Pivotal Research analyst Brian Wieser told Media Daily News that business demographics -- rather than consumers -- should play a more important role.

He views the change in the economy as a "related" factor to the key driver of spending trends, rather than the "ridiculous" notion that it's all about the consumer. The change can help determine certain spending trends, such as where companies will invest media dollars.

"Consider the United States in 1987: 77% of companies with fewer than 10 employees accounted for 13% of the country’s total business receipts. Twenty years later, a slightly larger share of businesses in the economy were of comparable size, but accounted for under 9% of receipts.

Companies with between 10 and 499 employees declined slightly as a percentage of the economy’s total, but their percentage of business receipts declined substantially, falling from 41% to 30%. Enterprises with more than 500 people grew from 0.2% of total enterprises towards 0.3%, but grew the share of the economy’s receipts from 46% to 62%," Wieser wrote in a research report published Friday.

Wieser's view partly explains why national advertisers have cut their local advertising budgets. "The size of a business has become a proxy for organization orientation of a company," he said. "If you have more than 500 people in your company, chances are your market is national or international, not local."

Wieser lays out the data to support his thesis on business vs. consumer, referring to the shift in ad spending out of local media and into national media. He points to the share of employees inside of companies to illustrate the key points.  

He refers to the movement as the "Macy's effect" -- where "over recent decades, retailers went from being smaller and regionally oriented to being substantially larger and more nationally oriented in their budget setting processes."

Wieser said the report, published Friday, doesn't reveal clear and conclusive findings, but rather argues why economic trends and data on the size of businesses relate to local and national spending trends.

The higher share of the economy in small- and mid-sized businesses should have some impact on media and marketing budget allocations.

"Businesses with fewer than 10 employees account for more than double the percentage of the U.K.'s national employees vs. what those kinds of businesses account for in the United States. That may help explain why paid search is much more proportionately important in the U.K. than in the U.S., given the relative value that small enterprises will find in paid search vs. other media," Wieser explains in the report.