Retail spending in the Detroit area is expected to reach $63 billion this year, a 13.5% increase versus 2020. These estimates are based on a revised forecast from the National Retail Federation (NRF).

Since 1920, when WWJ-AM signed on as the first station in Detroit, local business owners have depended on radio advertising to help market their goods and services to Southeast Michigan consumers.  But has the Coronavirus pandemic altered the medium's ability to deliver customers to ring up sales for local retailers?

Two critical marketing metrics indicate that advertising on Detroit radio remains the best way for a small business to advertise.

The first measurement is reach. This is the number of different consumers who are exposed to an advertising campaign.

The second measure is return-on-investment (ROI). This is the amount of sales a business can expect for every one dollar invested in advertising.

Based on these metrics, here is how advertising on Detroit radio measures up to other options available to local small business owners.

Earlier this year, based on projections from The National Retail Federation, Detroit area consumers were expected to spend more than $59.8 billion at retail this year, a 6.5% increase versus 2020. New data, however, indicates spending will be remarkably higher.

The NRF revised its data this month, and now expects annual growth of 10.5% to 13.5%. Based on these revisions, the Detroit area retail economy could now top $63.0 billion. Excellent news for Southeast Michigan small business owners.

“The economy and consumer spending have proven to be much more resilient than initially forecasted,” NRF President and CEO Matthew Shay said. “The combination of vaccine distribution, fiscal stimulus, and private-sector ingenuity have put millions of Americans back to work. While there are downside risks related to worker shortages, an overheating economy, tax increases and over-regulation, overall households are healthier, and consumers are demonstrating their ability and willingness to spend. The pandemic was a reminder how essential small, mid-size and large retailers are to the everyday lives of Americans in communities nationwide.”

To put in historical context for Detroit small business owners, Mr. Klenhenz noted that he anticipates the fastest growth the U.S. has experienced since 1984. The reopening of the economy has accelerated much faster than most had believed possible a year ago.

To capture the largest possible share of spending growth, local retailers will need to advertise. By the most crucial marketing metrics, the best best way to reach area consumers is by advertising on Detroit radio.

Since March 2020, when the first case of COVID-19 was reported in the Detroit area, more than 427,849 local people have been infected, according to data collected by USA Facts. The measures imposed to contain the outbreak have transformed the way consumers work, shop, commute, and conduct the business of everyday life.

One aspect of daily life in Detroit that remains little changed due to the pandemic is radio listening. Despite the Coronavirus crisis, radio has held its long-held position as the most used of all local media. This is good news for area business owners who depend on radio for marketing their goods and service.

Each week, according to Nielsen, 2.8 million adult consumers tune-in to a Detroit radio station.  This is significantly more people than are reached by all other local advertising options, including TV, cable, streaming video, streaming audio, social media, and newspapers.

There are 864,537 millennials in the Detroit area.  The oldest of them turn 40 this year. According to The Pew Research Center, millennials comprise the generation of Americans born between 1981 and 1996.

As a consumer group, millennials account for an outsized percentage of retail spending. This generation represents 24.6% of the Detroit area population but almost one-third of metro-area sales. 

All in, Detroit millennials are expected to ring up more than $27.3 billion in purchases during 2021.  You name it, millennials are planning to buy it.

According to Nielsen, over the next 12 months, Detroit millennials will show up in huge numbers at auto dealerships, furniture stores, mattress stores, appliance stores, home improvement stores, and scores of other area retailers and service providers.

Every week, according to Nielsen, 84% of adult consumers tune in to a Detroit radio station. This is significantly more people than watch broadcast TV, local cable, or video streaming services. It's more than use social media sites like Facebook or Instagram.  And, it's more than read local newspapers.

Detroit radio is also the medium with the greatest reach among millennials, a generation that not only has embraced an abundance of online media options but also accounts for nearly a third of all local consumer spending.

This reach advantage is a crucial reason why Southeast Michigan small business owners depend on Detroit radio to market their goods and services.

A study released this week by Edison Research and NPR discovered that their six distinct types of radio listeners. The study also examines how each group of listeners engages with both programming and advertising.  These distinctions are important for Detroit small business owners to understand.

The six listener categories as described in the study are:

Now 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.

Detroit consumers are expected to spend nearly 7% more at retail in 2021 than in 2020. This forecast is based on recently released data from the National Retail Federation.

To lay claim to a significant share of growing consumer spending, Southeast Michigan retailers will need to advertise.

“Think you have a great product?” asks the US Small Administration. “Unfortunately, no one’s going to know about it unless you advertise.”   

“Advertising, if done correctly, can do wonders for your product sales, and you know what that means: more revenue and more success for your business."

Scientifically speaking, the fastest way a marketing message can reach the areas of a Detroit consumer's brain responsible for purchase decisions is through the ear.  That's why audio advertising can be far more potent than visual messaging.

Each week, according to Nielsen, 62.5% of Southeast Michigan consumers watch video programs that aren't delivered over-the-air by local TV stations.  They aren't coming from a local cable company or by satellite.  Instead, these programs are being streamed directly to viewers via an internet connection.

This type of streamed video content is called OTT (Over-The-Top-Television) or CTV (Connected-Television). These two terms are sometimes are often used interchangeably but do have a subtle difference.

OTT generally means the video is watched on a small device like a computer, tablet, or smartphone.  CTV, on the other hand, typically means the content is viewed on a smart-TV or a regular television using a streaming device like a Roku or Amazon stick.

In Metro Detroit, OTT/CTV has exceeded the weekly reach of local newspapers and streaming audio services such as Pandora and Spotify. The medium is rapidly approaching the reach of local cable and broadcast TV stations.

Each week, according to Nielsen, more than 3.1 million adult consumers tune-in to a Detroit radio station. This is significantly more than watch local TV or cable. More than stream video channels like Netflix or Hulu. More than read local newspapers. More than use Facebook or Instagram. More than listen to online audio services like Pandora and Spotify.

But almost everyone knows (including many who advertise on Detroit radio) that consumers only listen to local radio stations during the day. Right? Wrong!

According to Nielsen, 49% of local consumers listen to Detroit radio stations each week between 7:00pm and 12:00am. This is a larger audience than Pandora, Spotify, and Instagram combined reach during an entire week.

For Southeast MIchigan small business owners, radio's immense nighttime audience offers a unique value proposition.

Southeast Michigan consumers are expected to spend upward of $58.8-billion at retail in 2021. This would be, at minimum, a 6.5% jump over 2020. The forecast is based on newly released estimates by the National Retail Federation.

“Despite the continuing health and economic challenges COVID-19 presents, we are very optimistic that healthy consumer fundamentals, pent-up demand and widespread distribution of the vaccine will generate increased economic growth, retail sales and consumer spending,” NRF President and CEO Matthew Shay said.

“From the outset of the pandemic, retailers have gone above and beyond even the most conservative safety guidelines to protect and serve their associates and consumers alike."

To capture the largest possible share of spending growth, local retailers will need to advertise. By the most crucial marketing metrics, the best best way to reach consumers is by advertising on Detroit radio.