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TV Market Segments: Buying Local

June 24th, 2015   ||    by Doug Bonderud

We’ve all heard the term “go big or go home.” When it comes to TV market segments, however, the common wisdom is that bigger doesn’t always mean better. In fact, local advertising is often more efficient than macro advertising. When you have to decide whether it’s more beneficial to go big and hope for better reach or aim for a more targeted audience, here are a few things to keep in mind:

Current Market Trends

According to data from BIA/Kelsey, national advertisers are increasing their spending in local markets to target consumers in certain areas. In fact, BIA/Kelsey predicts that national agencies will account for more than 43 percent of all ads seen on local television networks by 2018. Total spending will also increase from just over $56 billion this year to almost $69 billion over the next three years. While local advertisers will continue to invest in small TV market segments, there’s now a real push for the big players to capitalize on smaller, local markets.

The Price Point

One key benefit to advertising locally as opposed to on a macro level is cost. As noted by AdWeek, the cost to run an ad across the top 210 designated market areas (DMAs) in the United States is less than the cost of one national network buy. Purchasing a single time slot was also found to have lower cost per impression (CPM) than scattering the ad across multiple dayparts. When it comes to cost efficiency, there’s no question: Local markets are better than their macro counterparts.

Building Awareness

There are two big advantages to going small. The first is local brand awareness. Many national companies misinterpret this and worry that it will be hard to convince consumers that they’re truly local. This can be possible with the right audience-targeting tools. By discovering the unique needs of a designated market area and then pointing viewers toward a local franchise or retailer, it’s possible to combine a sense of community and trust with national reliability.

It’s also possible to make ad dollars go further in a local market because time slots can be created with a single market segment in mind, rather than trying to capture the broadest possible audience. With fewer possible impressions but a much higher likelihood of conversion, the cost-to-impact ratio of local advertising makes it a smarter buy than macro advertising.

The bottom line when it comes to local versus macro? Macro is easy, but expensive. Going local requires more legwork, but offers a better return when done right.

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