Even for national brands, all business is local. And that’s because branding and advertising influence consumer purchase decisions at the local level. In fact, we spend nearly as much ($178 billion) on auto insurance – a product generally purchased with a local agent – as we do on all retail e-commerce categories combined ($186 billion).

1. National Brands,
Local GROWTH
competition or cooperation?

2. The “Local Business” Perspective
Many products of national brands are sold by locally-owned or operated businesses, such as auto dealers, insurance agents, pest control
companies, cable resellers, hotels or franchisees of national chains. These local businesses leverage the national brand’s business model and
brand equity, and in return, create human connections with local customers to grow their business and provide revenue back to the national brand.
Marketing is tough for these local businesses. Just ask them.
We spent dozens of hours interviewing local representatives of
national brands, and found that:
• Local businesses do not consider themselves to be
Internet-savvy. They are generally masters of human
connections, using personal relationships to grow
their business. However, they lack the necessary
skills to navigate the fragmented and complex digital
advertising ecosystem.
• Local businesses are often skeptical of local marketing
solutions and choices in marketing programs “can be
overwhelming”. Since 2007, the number of media sources
used by local business has jumped by 90%.4
2
introduction
Even for national brands, all business is local. And that’s because
branding and advertising influence consumer purchase decisions at
the local level.
In fact, we spend nearly as much ($178 billion) on auto insurance – a
product generally purchased with a local agent – as we do on all retail
e-commerce categories combined ($186 billion).1
So it’s not surprising
that national advertisers
compete fiercely for
attention at the local level,
spending $42.5 billion on
local media advertising
in 20122
. This number is
expected to increase more
than 20% by 2017.
For these national brands, many factors have been building over the
past 10 years to create serious challenges for their advertising.
• Increasing Complexity: Digital media, mobile in particular, is
fragmented and evolving. Smartphones are quickly becoming
our primary way to conduct local searches. Yet customers can
be hard to find as they spend time across an array of mobile
channels, ad networks and publishers.
• Unfamiliar (and Inadequate) Outcomes: Many digital media
offerings for local businesses don’t speak their language (phone
calls, leads), pricing by impressions or clicks.
• Competing Agendas: It’s difficult for national brands to manage
affiliates, resellers and local agents advertising, which can often
be “off message” and competitive with one another.
A national brand must be able to spend efficiently and effectively at
the local level and measure its results. In this paper we examine
the topic of “National Local” advertising from three perspectives: the
national marketer, the local business affiliated with the national brand,
and the consumer. We use data from thousands of digital advertising
campaigns, hundreds of thousands of digitally-sourced leads
(phone calls and form fills), and dozens of hours of interviews with local
businesses.
Our analysis found:
• Coordination significantly lowers marketing costs.
Competing locally can double the cost of acquiring customers. A
centrally-managed program solves problems of competition and
consistency.
• Local businesses are overwhelmed. They would prefer to
spend more on digital advertising aimed at customer acquisition,
and yet are underprepared to do so.
• Consumers prefer human connections. Consumers prefer
phone calls over digital interactions for most local service-
based businesses.
• Funds are available. In most cases, brands already have the
budget to fund these programs through co-op advertising. This
market is estimated at $50 billion3
, with less than one percent
currently flowing into the digital advertising ecosystem. That
means the remaining 99% goes to offline advertising.
We conclude that co-operative digital advertising programs between
national advertisers and local businesses are an attractive solution
to these challenges and promise both greater scale and improved
economics for brand and local business.
Billion on local media
advertising in 20122
$42
2007
3.0 3.1 3.1
4.6
4.4
5.8
6.0
4.0
2.0
0.0
2008 2009 2010 2011 2012
Average number of media sources
used by local businesses

3. • Local targeting of advertisements is extremely important. Local
businesses such as auto dealers, insurance agents or hoteliers
often compete with other businesses within a few miles or a few
blocks from each other.
• Local businesses focus much of their time on customer retention,
and yet prefer to spend their advertising dollars on customer
acquisition. According to BIA/Kelsey, 2012 local ad spend that
“was primarily for customer acquisition outnumbered those that
said their ad spend was primarily for customer retention by about
7 to 1.”5
• Customer acquisition programs are crucial to local business
viability. For local businesses, the percentage of business that
comes from new customers averages 40% each year.6
The “National Brand”
Perspective
National brands rely on local businesses to invest in marketing efforts
to grow their business, and yet these local marketing efforts can
be counterproductive.
One issue is brand consistency. National brands spend billions of
dollars on core brand advertising principles of “frequency, consistency
and relevance.” These efforts are designed to build awareness and
familiarity with a brand, enter a consumer’s consideration set and drive
a purchase at the local level.
A second issue is overpaying for branded search advertisements. We
believe best practices for branded search advertisements include a
single national campaign that includes the consistent, relevant brand
messaging with a call to action and a single local campaign that drives
a consumer to the appropriate local operator.
Our analysis of National Local campaigns shows that this maximizes
leads. With a coordinated program that advertises the national
brand “National Widgets” and where to purchase the product locally
“Seattle Widgets Dealers”, the brand can expect nearly double the
leads at a modest increase in cost-per-lead. When the program is
uncoordinated, and there are multiple parties competing for the same
local buyer, brands see significant increases in cost per lead, and pay
the maximum allowable cost-per-acquisition. It also creates a worse
consumer experience as the most applicable local businesses are not
necessarily presented first or at all to the consumer because they are
pushed out by those willing to bid up. Competitive local campaigns,
particularly in dense geographic areas, can more than double cost-
per-lead, and can be even higher when authorized resellers or affiliates
are involved in the auction.
A third issue is lead allocation. The Seattle area has hundreds of
insurance agents and hotels, and has dozens of auto dealers. Many
of these businesses compete for the same customers under the same
brand and would expect any national program to fairly distribute leads
among them.
One potential solution raised by the industry is latitude/longitude data,
which promises to deliver a consumer to the closest location. However,
numerous reports show that only 5%-10% of local mobile traffic has
true lat/long data7
. Even if this problem is solved, lead allocation would
be difficult due to the fact that consumers may be interested in a local
business, but not necessarily the closest one to them when they are
doing a search. For example, we may be searching at work when we
are looking for a solution closer to home.
A fourth issue is responsiveness at the local level. In a study of more
than 150,000 phone calls across many local business categories, more
than 20% of phone calls generated by digital advertising campaigns
go unanswered by the local business, and the majority of these phone
calls are during business hours. National brands, therefore, must
have an effective way to record and remarket to these leads and/or
coach their local affiliates on the importance of answering the phone or
following up promptly.
A fifth issue is pricing and the benefits a national brand can provide a
local business through a centrally-managed program. Local marketing
solutions must be priced to include the cost of media to acquire a lead,
in addition to the cost of managing the local account. A National Local
program reduces much of the overhead in a local marketing solution by
coordinating and managing the program centrally.
Where could national brands fund programs to address this need?
One source might be existing co-operative advertising programs that
have not yet been widely adopted in the digital advertising space.
Co-operative advertising programs, where brand and retailer share
advertising costs, are estimated to be a $50 billion market with
“significantly less than one percent” being spent digitally.3
The “Consumer” Perspective
Data on consumer interactions with local advertising campaigns
is a bright spot for national advertisers that are investing in local
leads campaigns. For starters, consumers are actively reaching
out to businesses over-the-phone in large numbers from digital
advertising campaigns.
We examined data from more than 10,000 digital campaigns across
more than 40 small business categories where consumers were offered
both a form-fill option to contact a local business and a telephone
number and consumers opted to make a phone call 81% - 89% of the
time. In addition, consumers are exhibiting a high degree of urgency
Automotive
25% unanswered calls
Multifamily Housing
40% unanswered calls
3

4. to make a purchase in nearly every category. As an example, in the car rental category
roughly 80% of phone calls were for same-day rentals. Our conclusion is that consumers
overwhelmingly prefer a human connection for most service-based business purchases.
In addition, many of these consumers are new prospects – precisely the targets of a
national brand’s television, radio and other “brand-building” campaigns. In a study of
more than 65,000 calls to auto dealers, we found more than 60% of callers were bona
fide new prospects as identified via phone tree.
Fragmented Mobile Playing Field
There are two ways to look at mobile search. One is through the lens of the traditional
browser-based search players, where Google owns roughly 95% market share in the
United States.8
The other is through the lens of a fragmented mobile world where half of
consumers say that they use applications to conduct local searches and nearly 40% of
consumers use directory sites or apps as a secondary source of search.9
So which lens is more relevant for National Local advertising campaigns? The latter.
Google is as essential for any local advertising campaign as is the publisher that has the
most reach. It is also the most expensive publisher due to its efficient marketplace. When
comparing apples-to-apples, Google can be twice as expensive to generate a quality
phone call as other mobile publishers. And measuring apples-to-apples is important. On average, only 40% of phone calls from Google are new
customer prospects, with most of the remainder being wrong numbers, spam phone calls or customer service calls.10
Publisher diversification is
a critical component to extending the reach of any program.
National Campaigns, Local GROWTH:
What Will The Future Hold?
For brands with a local presence, marketing budgets will continue to be reallocated toward digital campaigns that produce local leads, and
approaches that cooperate with local operatives have the promise of lower cost-per-lead and greater scale. Based on the observed trends and
data, we believe that successful National Local campaigns will share the following attributes:
• National Local campaigns will be funded by the national brands “in cooperation” with local operatives so that each party has “skin in
the game”.
• Local businesses will require that national campaigns have conversion tracking elements, as well as the ability to fairly allocate leads from
common geographic areas.
• National brands will need the ability to filter, verify and capture leads that are underutilized by local businesses due to poor call handling or
after-hours phone calls.
• National brands will require a solution with dedicated training and service for local agents to ensure local business satisfaction.
• National brands will require diverse and broad publisher solutions to diversify from Google and to keep average cost-per-lead down.
• National brands will increase their spending on marketing analytics technology to help explain the success of its television and other offline
branding campaigns and provide cross-channel attribution solutions.
Mobile Callers to Auto Dealers
Mobile Callers to Auto Repair Shops
60% New
prospects
Follow-ups
for sales
40%
New
prospects
Follow-ups
for service
59%
41%
4

5. About the author
John Busby is Senior Vice President of the Marchex Institute. The
Marchex Institute is a research and analytics team that publishes
findings on mobile advertising and the growing digital call advertising
industry. It also provides custom research and consulting services for
key customers on their mobile and call-ready advertising campaigns.
Previously, Mr. Busby served as vice president, product engineering.
Prior to joining Marchex in 2003, he held various product and
program management roles at InfoSpace’s consumer and wireless divisions, Go2net
and IQ Chart.
Busby holds a bachelor’s degree from Northwestern University.
About Marchex Institute
The Marchex Institute is a team of senior analysts and scientists dedicated to improving
the digital call advertising industry and mobile advertising campaigns.
About Marchex
Marchex, Inc. delivers customer calls to businesses and analyzes those calls so
companies can get the most out of their mobile advertising.
Marchex supports its customers through a unique technology platform that has three
primary components: (1) Call Analytics, which powers all of our advertising solutions,
and allows partners to leverage data and insights that accurately measure the
performance of mobile, online and offline call advertising; (2) Digital Call Marketplace,
which annually connects millions of consumer calls to our advertisers from a range
of mobile and online sources on a Pay For Call basis; and (3) Local Leads, a white-
labeled, full-service digital advertising solution for small business resellers that drives
quality phone calls and other leads to their small business advertisers.
Marchex is based in Seattle. To learn more, please visit www.marchex.com/products.
Marchex Investor Relations
Trevor Caldwell, 206-331-3600
Email: ir(at)marchex.com
or
MEDIA INQUIRIES
Marchex Corporate Communications
Sonia Krishnan, 206-331-3434
Email: skrishnan(at)marchex.com
Notes and References
1. Auto insurance was $178 billion in 2012 - http://www.
ibisworld.com/industry/automobile-insurance.html
Retail e-commerce revenue was $186 billion in 2012
- http://thenextweb.com/insider/2013/02/07/comscore-
retail-e-commerce-hit-186-2b-in-2012-thanks-to-15-
growth-the-strongest-since-before-the-recession/
2. BIA/Kelsey, 2013 Local Media Forecast
3. Co-Op Advertising: Digital’s Lost Opportunity, 2012
Rebecca Lieb, The Altimeter Group / IAB / Local
Search Assn
4. BIA/Kelsey LCM Wave 16, Oct 2012 – Surveys of small
business owners
5. BIA/Kelsey LCM Wave 16, Oct 2012 – Surveys of small
business owners
6. BIA/Kelsey LCM Wave 16, Oct 2012 – Surveys of small
business owners
7. http://www.vervemobile.com/blog/the-dirty-little-secret-
about-location-targeting-in-mobile/
8. http://gs.statcounter.com/#mobile_search_engine-ww-
monthly-200812-201205
9. http://www.localsearchstudy.com/Local%20Search%20
Study%202012.pdf
10. Marchex Institute, 2012
5