In 2007, local business spent 10% more on advertising than they did on promotions (e.g., coupons, discounts, and promotional products); however, in 2012, they spent a stunning 81% more on promotions, according to a new report by Borrell Associates.
The key to that change is digital promotions, Borrell found.
Even though local advertising is forecast to rebound in 2013—up an estimated 8% year over year, to $101 billion—that projected spend will still be 16% less than 2007 levels. Meanwhile, spending on local promotions is forecast to reach $176 billion in 2013, up 33% from $130 billion in 2007.
The steady four-year decline (2007-2010) in ad spend was due primarily to the collapse of the nation’s housing marketing in 2007 and the Great Recession of 2008, according to the report. Meanwhile, as the ad market struggled to recover, the use of local promotions accelerated.
Promotions spending is defined in the study as spending in each of the 12 promotions subcategories: Coupons, discounts, promotional products, event marketing, licensing, point-of-purchase, sampling, sponsorships, loyalty/retention programs, specialty printing, games and contests, and white paper marketing.
Below, selected findings from the 2013 Local Promotions Forecast by Borrell Associates.