Nothing like a local research firm’s conference to get a sense of where we are with the local digital revolution. Speaking at LOAC West this week in San Francisco, Borrell Associates co-founder Gordon Borrell says that the lines of revenue between traditional and digital “are crossing right now. It will be obvious next year.”
This year, local digital represents $66 Billion, while traditional represents $67.7 Billion. But in 2017, local digital will climb dramatically to $80.7 billion, while traditional falls to $62.9 Billion.
Per Borrell’s research, targeted banners make up 60% of the digital revenue; untargeted banners represent 9%; paid search represents 14%; and video represents 4%. “Other” represents 3%.
But targeted banners – absorbing the boom in mobile, which will outpace non-mobile revenues by 2018 – are set to go through the roof. By 2020, targeted banners will represent 83 percent of all digital revenue. While video’s share among the various channels will fall to 9 percent, Borrell reminds that it will actually be taking in a lot more money. We’ll be looking at an $8 billion pool, he says.
Borrell also says to look beyond advertising. Promotions are several times larger than advertising. Marketing services could be an even bigger opportunity, as many SMBs increasingly tend to sink their resources into website development and reputation management and other related services instead of buying advertising.
The turn to mobile was something that was highlighted at LOAC West by ComScore Chairman Gian Fulgoni. Rather than cannibalizing existing time spent on the Web and the size of the audience, mobile is actually increasing both, he says. It has also become a stronger advertising channel than desktop for many functions.
Mobile beats desktop in all the key areas because ads are delivered so much lower in the purchase funnel. It is 1.6X more valuable for “aided awareness; 2.1X more valuable for “likelihood to recommend”: and 2.3X for “purchase intent.”
Mobile campaigns also deliver comparable reach/frequency to desktop, and drive significant incremental reach. It is especially strong where mobile apps can “improve real world behaviors,” such as hailing cabs, exercising and dating. In fact, mobile saw a 59 percent growth for discretionary spending categories, compared to 17 percent for desktop. Mobile represented 19.8 percent of all discretionary spending in 2Q 2016.
As a transaction channel, however, mobile remains less effective on complex purchases that require several screens of information, larger pictures, and where there are concerns about security. While it is becoming more of a level playing field with larger mobile screens, etc. the best kind of mobile purchase remain for simpler purchases, such as video games, watches and toys.