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.

National Spending

Similar to local markets, promotions spending is outpacing ad spend. Total advertising reached $244 billion 2012; however, promotions spending skyrocketed to more than twice that level, $584 billion. 

After rising past the half-trillion dollar level in 2012, total promotions spend is forecast to rise 8% in 2013, to $628 billion. The local portion of that spend constitutes roughly 28% of total promotions.

Promotions Going Digital

Total (national and regional markets) spending on digital promotions is expected to reach $36.1 billion by the end of 2013, triple the $13.2 billion recorded in 2008. By 2017, digital promotions spending is expected to surpass $80 billion.

Local Digital Promotions Spend

Roughly $1 of every $20 spent on digital promotions is spent by local businesses targeting their own markets. The local side of the digital promotions space is growing briskly, with an increase of 25.1% projected for 2013.

Online coupons accounted for most (80.4%) digital promotions spend in 2012; the category is expected to account for 82.8% in 2012.

Local marketers have begun to penetrate the digital sampling category (e.g., offering free 30-day software trial) (9.3%) and, to a lesser extent, the event management category (5.4%). The latter share is expected to grow 19.9% year over year by the end of 2013.

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Local Marketing: Promotions Spending Surges as Advertising Slips

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image of Lenna Garibian
Lenna Garibian is a MarketingProfs research writer and a marketing consultant in the tech industry, where she develops engaging content that builds thought leadership and revenue opportunities for clients. She's held marketing and research positions at eRPortal Software, GAP Inc., Stanford University, and the IMF. Reach Lenna via Twitter @LennaAnahid and LinkedIn.