It’s budgeting season and many of our clients have expressed their concern about next year and beyond. Both certain and uncertain dynamics are at play involving recurrent influences (i.e., politics, Olympic games) and the continuous changes (i.e., digital, consumer content consumption) in the local advertising landscape.
No longer is budgeting accomplished with a few keystrokes in an Excel spreadsheet, and no longer is revenue growth assured given prior successes. The best way forward is developing a revenue plan on solid forecasting that includes historical, current and future projections.
To help CEOs, CROs, CFOs and general managers develop accurate, grounded revenue budgets, we’re offering our approaches and strategies for growing your media business in a multiple part series (Part 1 in the series). This post, part 2 in the series, offers the three important areas of consideration when budgeting.
First, have a clear understanding of the total local advertising in your market and how that pie splits between the various media.
If you don’t know the size of the pie and what your media and other media take out, how can you really assess the opportunity for you and your other direct competitors?
For example, it is valuable to see that your media may only represent 5% to 15% of the total available local spend in your market. And just as important is to know what some competing media in your market are generating in terms of local advertising.
Keep in mind that if your media represents 5% to 15%, this means 85% to 95% are going to other media. We view this sizing of the local advertising market and competition as a critical first step.
Second, a solid grasp of local advertising by vertical and business category in your market is essential, as it will help determine where to focus your attention.
For the 12 verticals BIA tracks, there is a wide variance in size, growth, the number of relevant categories that make up each vertical, and how the local advertising splits between the different media competitors.
This analysis may help identify that, for example, QSR is a category that has great potential for you, or that another traditional media is over-performing in Home Centers.
Third, our contention is that to grow in 2019, you must implement a strategy to take share of wallet from other traditional media and participate more in the shift to online/digital. To do this successfully, you need to know where those opportunities lie.
While all businesses have differing ideas and approaches to budgeting, giving each of these areas the appropriate consideration and review offers insights into the best plan for success in 2019.
We spend our time at BIA exhaustively examining these topics and, in fact, designed our BIA ADVantage local market intelligence platform to be a core resource for our clients as they tackle these questions.
Tomorrow, we’ll continue this series to offer three recommendations for growth and success in 2019.