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Guest Blog: How COVID Is Accelerating a Massive Shift to Hyper-Local Advertising

When the COVID-19 crisis first started to unfold, I did what many people chose to do: hunker down with my family. After two months of quarantining in New Canaan, Connecticut, I’ve been reminded of the pivotal role that local plays in the media ecosystem.

Adam Helfgott, CEO of MadHive

Adam Helfgott, CEO of MadHive (Image credit: MadHive)

It’s similar to the difference between shopping at Walmart and shopping at a mom-and-pop store where you get to know everyone. Local media provides in-depth information that is integral to specific communities, rather than just overarching national trends. Local media has the power to curate highly engaged communities of people, which then presents a prime opportunity for advertisers to deliver hyper-localized messaging.

Traditional broadcast networks have already started leaning into this heavily, with media giants like NBCUniversal opening new local ads businesses for streaming TV. With 25% of U.S. households expected to cut the cord by 2022, OTT is enabling advertisers to offset the decreased viewership on linear and continue to reach 100% of local markets. All while trading in massive blanket buys for more granular targeting capabilities based on geography, interests, and more.

Both local and national brands have been doubling down on local buys, especially advertisers across the auto, food, and hospitality industries. With COVID upsetting the natural order of the entire advertising industry, local is becoming an even more important piece of the puzzle for the future of the TV ad world.

Upfronts Upended

COVID-19 stay-at-home advisories have led to a large number of upfront cancellations, and television dollars committed by big brands dropped by about 33% this Spring amid rising economic uncertainty. Networks are optimistic that they will recapture some of those dollars as the world starts to shift back toward some sort of normalcy -- whatever that is these days. Brands and networks will be counting on programmatic TV buys to supplement this lack of the traditional upfront buys.

With that said, brands and networks will be even more concerned with efficiency. Networks will be trying to get the highest CPMs possible, and brands will be trying to ensure that every media dollar spent is working as hard as possible. These needs from both sides of the supply chain, paired with the $7 billion withheld from this year’s upfronts, will inevitably have everyone willing to experiment more heavily with addressable, which can ensure impressions are worth the premium. We’re not home free yet, though.

The Separation of States

After more than 60 days of stay-at-home advisories, states are finally starting to open back up. But with different regions of the country choosing different reopening strategies, advertisers will have to adjust messaging accordingly. This means developing hyper-local campaigns with messaging that reflects the current happenings on a region-by-region basis, and delivering them via ad-supported OTT platforms that enable geographic targeting.

The combination of stay-at-home orders and economic uncertainty is also causing a surge in FAST adoption, with some reports showing that ad-supported TV channels and apps were up 108% due to the quarantine. And with Burger King paving the way and showing that you don’t have to be afraid to run ads near coronavirus news coverage, now is the perfect time for emerging advertisers - think DTC brands - to experiment on TV without a massive upfront commitment.

Additionally, local OTT is leading the way when it comes to trading in the GRP for metrics like in impressions. For example, NBC and Telemundo-owned local TV stations already started using impressions instead of traditional ratings points to measure an ad campaign’s effectiveness.

While the current situation is unfortunate, it is somehow managing to kickstart the advertising industry into the future. Trading in blanket upfront TV investments for highly targeted addressable ad buys, massive national campaigns for hyper-local campaigns, and, of course, age-old GRPs for impression metrics. Now is the time to experiment. Now is the time to drive change. And don’t be surprised if the little guys are leading it.

Adam Helfgott is CEO of MadHive, an end-to-end advanced advertising solution for digital video that leverages cryptography, blockchain, and AI to deliver evidence-based business outcomes.