"There is a saying in the local-media business: Local businesses don't 'buy' advertising; they're sold it," said David Dague, VP-marketing at Localeze. "Add economic crisis to the equation, and the challenge is exacerbated."
Vulnerability Historically, local markets have been less susceptible to economic cycles because they are driven by small- to medium-size businesses that don't have public shareholders to please and, thus, have less pressure to cut costs such as advertising. But given the broad implications of the credit market, "this is one time when a national situation is driving a local outcome probably more dramatically than it would ordinarily," said Steve Ridge, president-TV and exec VP at Frank Magid Associates.
It's hard to know exactly what will happen since the effects of the credit crunch are just starting to be seen. According to American Express' Open Small Business Monitor, which has monitored small-business issues for seven years, concerns about cash flow have risen since last year, and capital- investment plans are the lowest in the history of the study. Just under half the small-business owners surveyed planned to cut back or delay marketing expenditures.
Vulnerability Historically, local markets have been less susceptible to economic cycles because they are driven by small- to medium-size businesses that don't have public shareholders to please and, thus, have less pressure to cut costs such as advertising. But given the broad implications of the credit market, "this is one time when a national situation is driving a local outcome probably more dramatically than it would ordinarily," said Steve Ridge, president-TV and exec VP at Frank Magid Associates.
It's hard to know exactly what will happen since the effects of the credit crunch are just starting to be seen. According to American Express' Open Small Business Monitor, which has monitored small-business issues for seven years, concerns about cash flow have risen since last year, and capital- investment plans are the lowest in the history of the study. Just under half the small-business owners surveyed planned to cut back or delay marketing expenditures.
Our take:
Local businesses often don't get their fair share of the media spotlight, and that seems to still be holding true despite a lot of hype and rhetoric about "main street" by the media and Washington alike. Considering that so many digital signage networks have a hyperlocal focus, this could be potentially devastating for smaller firms who are just starting to shore up revenue streams with successful ad sales pitches.
Of course, it's also possible that the economic constraints placed on potential advertisers could cause the exact opposite to happen - with small advertisers moving away from local papers and circulars to move money into better-performing local digital signage networks.
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