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How Much Do Detroit Business Owners Spend on Advertising?

Apr 16, 2021 9:24:26 AM / by Larry Julius

Advertising In Detroit 2021 SpendingNow is a crucial time for Metro Detroit small business owners to advertise.  

According to the Conference Board, consumer confidence has surged to 110, the highest it has been since the onset of the pandemic last March.  The index has bounced back from a low of 89.6 in February. 

Moving forward, Southeast Michigan business owners can expect buyer optimism to remind high.

“The recovery in consumer confidence is set to continue in the coming months, buoyed by the combination of improving health conditions and wider vaccine distribution,” said Lydia Boussour, lead U.S. economist at Oxford Economics. “This should support hearty consumer spending and pave the way for a mini-boom in economic activity this spring and summer.”

As Detroit consumers gain confidence, they are expected to unleash the record $17.9-billion in personal savings amassed during the pandemic. This number is based on figures reported by Barron's in November. 

This combination of consumer confidence and the cache of cash-on-hand has led the National Retail Federation (NRF) to forecast a 7% increase in retail spending in 2021 versus last year.

To claim a significant share of the expected spending tsunami, Detroit business owners plan to boost advertising investments this year.

According to Borrell Associates, a company that tracks advertising trends across the country, Detroit business owners are expected to spend $2-billion to advertise the goods and services they sell. This represents an 8.0% increase versus last year.

Advertising Spending In Detroit 2021

Local business owners are expected to engage consumers using various media, including Detroit television stations, cable, streaming video, streaming audio, or social media, according to Borrell.

Considering two key metrics, reach and return-on-investment (ROI), the best option for converting local consumers to customers is with advertising on Detroit radio.  

Each week, according to Nielsen, Detroit radio reaches significantly more consumers than any other medium.Advertising In Detroit Media Reach 2020 (r2)

Radio's remarkable reach is especially true among Detroit millennials, who now account for nearly 33% of all consumer spending.

Advertising In Detroit Millennials (Dec20)

Reach is critical to the success of an advertising campaign. 

According to a Nielsen study, after the actual content of the commercial message itself, reach is the most potent advertising element that can drive sales. Reach is more important than brand, recency, or even context. Detroit radio provides local business owners with the most extensive reach among consumers.

Advertise In Boston Successful Campaign
Local radio's immense reach is responsible for delivering the most substantial ROI of any Detroit advertising options.Advertise In Detroit: Success Guide

Between April 30 and May 27 of last year, the darkest days of the pandemic, Nielsen analyzed the sales results of a retailer who conducted an advertising campaign during that period using both radio and TV.*

According to Nielsen, during the campaign period, the retailer experienced a 6.2% increase in sales growth.  The majority of the increase came from households where consumers were exposed to the advertising campaign.

Advertising ROI Detroit

When Nielsen looked at how each advertising medium contributed to sales growth, the consumers who were exposed only to the retailer's radio commercials were three times more likely to make a purchase than those exposed only to television advertising.

Television Advertising ROI Detroit

Overall, according to Nielsen, people who were exposed to only the retailer's radio commercials represented only 20% of all advertising impressions. However, these same consumers were responsible for 42% of the sales increases.

This is the bottom line of this study for any Detroit small business owner who is struggling with where to place their limited marketing budgets. Radio produces the most robust increase in sales for every dollar invested. In this Nielsen study, the retailer earned a $28,000 increase in sales for every $1000 spent.

These findings confirm 21 previous studies by Nielsen, which demonstrate that, on average, radio advertising returns $10,000 in advertising for every $1000 invested. The chart below shows the range of returns from each study.

These findings confirm 21 previous studies by Nielsen, which demonstrate that, on average, radio advertising returns $10,000 in advertising for every $1000 invested. The chart below shows the range of returns from each study.

Advertising On Detroit Radio Return On Investment

AdAge, a trade magazine for advertising professionals, calls these types of returns "eye-popping".  The magazine goes on to say radio's ROI is superior to commercials on TV, online, and social media.

Since 1920, local business owners have depended on Detroit radio to help market their goods and services to area consumers. Today, despite an overabundance of marketing options, most metrics prove radio advertising remains the best choice.

*Study commissioned by Westwood One

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Topics: small business, small business owner, best way to advertise, reach, reach and frequency, return on investment, ROI, advertising reach, small business marketing, small business advertising, advertising on radio, ad spending

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