Despite 9.8 million spending consumers now living outside the nation’s five capital cities – 36 per cent of the total population – the geographic bias towards metro audiences over regional stubbornly persists.

There are hard numbers to back up why a better approach to regional advertising is needed. Regional Australians are consuming products as rapidly as anyone else and reward brands that make the effort to engage with them. What’s more, the counterurbanisation movement during Covid has seen migration increasingly being driven by white-collar professionals and millennials, bringing the average age of the regional population migrating down to 33. Importantly, with a lower cost of living, many of these individuals have a large disposable income, resulting in grocery baskets 6.9 per cent bigger than those in metro.

There are equally compelling numbers showing the pay-off for brands investing in regional advertising. According to Boomtown research, 93 per cent of those who invest in regional media believing it is effective in achieving ROI. Excess share of voice thanks to a less cluttered media landscape is one reason why: Even now, only about 17 per cent of total media spend is going into regional areas, leaving a 20-percentage point gap.

So why aren’t more brands getting outside the cities? How do you make the case for the regional opportunity and overcome both the biases that still exist – both brand side and agency side – around these consumers? What does it take bat off limiting CPA numbers and sell in a regional media test?

These questions took centre stage at a recent joint Mi3-Boomtown CMO roundtable in Sydney, which brought together more than a dozen leading marketers from across categories including financial services, travel and tourism, retail and FMCG.

How those advertising regionally made it happen

Attendees were split between those who have an active regional strategy and those who do not. One recent convert is SunRice. When Tamara Howe joined the ASX-listed group as CMO, she was astounded to find a brand built by the Australian rice industry with roots in the Riverina didn’t have regional markets in its media strategy. 

“As regional Australia now makes up around 36% of the population and rice is a high penetration category, it makes sense that we need to include regional Australia to target all category buyers to drive penetration growth,” she said.

SunRice first focused on TV in regional markets and is now testing increasing media investment to build more efficient reach. In making the case for regional in her schedule, Howe noted media fragmentation is making metro markets harder and more expensive to build reach – particularly Sydney.

“I’d suggest regional markets are more efficient and effective at building reach. Further, in a high penetration category like rice, you need to be where your category buyers are. And that includes regional markets,” Howe said.

For Reflections Holidays, recognition 65% of its customers came from regional locations provided a persuasive data point for investing heavily into regional advertising as part of its first above-the-line campaign in 2022. Knowing unprompted brand awareness was low, CMO Peter Chapman has turbocharged the park operator’s brand health metrics through the campaign effort, achieving a +40% increase in prompted awareness. Notably, the work generated 20% business growth.

“It didn’t make sense to me we were paying Google when someone typed in ‘Seal Rocks holiday park’ when we’re the only holiday park in Seal Rocks and the media agency would high five itself on 10x ROAS,” Chapman commented. Going above the line has seen branded search grow exponentially.

“Going ABL and getting people in consideration benefits your entire portfolio. Yes part of our audience is there and you wouldn’t be there if you had a predominantly either a bricks-and-mortar business in the metro markets that didn’t have an ecommerce platform, or were still burgeoning in that space. But with most businesses, there is huge room in regional markets.”

For Chapman, the other important point is not to think of metro versus regional markets as Sydney versus Coonamble. Under the Boomtown media collective, 14 of Australia’s 19 largest cities are located in what are dubbed ‘regional’ areas, each boasting more than 100,000 residents (and rising to nearly 700,000 in Newcastle and on the Gold Coast).

“Coffs Harbour, Armidale, Geelong – in Europe or America you’d be talking about second cities, yet they’re underserved markets. And I do think people have more time in those markets to engage,” Chapman added. 

Spot the opportunity in the similarities and differences between regional and metro

A key discussion point during the roundtable was whether there’s opportunity for brands to grow in regional markets both by identifying similarities audiences have to metro audiences, as well as capitalising on differences. As marketers around the table agreed, starting with audience and through consumer insight provides a solid data point for either conversation – and both are delivering returns.

Regional areas present a huge opportunity for Blooms the Chemist in achieving its purpose of providing access to health and wellbeing to all Australians. The unique nature of the pharmacy industry has led the pharmacy chain to build out a strong physical footprint in regional areas.

“It becomes essential for us as a marketing team to support and strengthen the brand recognition in these locations,” said CMO, Yvette Costi. “Unlike metro areas, the catchment radius for our pharmacies in regional areas can be double or even triple in size, making it even more important to ensure we’re effectively reaching and serving these communities.”

Unique health needs in regional areas compounded by the challenges of physical distances and limited access to services has challenged many pre-held assumptions on who’s actually living in regional cities for Costi and her team. A good example is HIV patient needs, which are heavily pharmacy dependent. By using Census data, Blooms discovered people were not clustered in metro areas as assumed, and uncovered larger populations of patients in regional areas.

By contrast, knowing everyone loves food and most people (metro and regional alike) are wondering what to make for dinner provides a human truth SunRice can work with universally. As a result, it uses the same creative executions and narrative in all markets.

“We aim to solve that problem with easy wins for mid-week family dinners – the Make Tonight Rice Night campaign, featuring Poh Ling Yeow, works with all audiences,” Howe said.

Get over outdated audience perceptions with data

This data-driven, consumer insight-first approach was acknowledged throughout the conversation as critical to gaining a more insightful and less biased understanding of consumers residing in regional areas, challenging persistent myths around their make-up. Census data was raised by several attendees as a crucial input, while others noted rich first-party data sets they can leverage and cross reference with third-party data points to build a stronger picture of regional consumers.

“AI has been brilliant in helping us uncover patterns and make recommendations based on health conditions,” said Costi.

Then there’s those outdated opinions to bust. The CMO of a premium digital subscription provider admitted the business has held itself back by holding onto perceptions its more expensive offering is for a more affluent buyer and therefore skews metro. A national buying approach using global campaign material certainly hasn’t helped either.

But a recent investigation splitting down where the existing customer base is at a hyper-local level revealed strong penetration and usage in Mackay, Queensland and Bathurst, NSW.

“It’s spun up new thinking that perhaps there are affluent customers in those markets, and they probably have more time to listen, whereas we struggle to get penetrate with people in parts of Sydney who commute but fall off as they don’t use the product in the same way,” the CMO said. “So we’re regionally curious at the moment.”

The marketing chief of a cruise brand said its historical media approach has been to go broad and east coast.

“Post-covid we’re seeing hugely different audiences which presents more opportunity that’s untapped,” the marketing chief said. “We’re right in the thick of it now. These big cities – Toowoomba, Ipswich – are big feeders for us into our Brisbane port. Even the drive from Bathurst to Sydney is achievable. We’re looking at mapping around the ports and market in terms of what it means. Then does that mean associations with airlines, or partner hotels?”

While a work in progress, what’s clear is these regional audiences are spending a lot on their travel plans, making them a strong pipeline for the cruise brand. “We’re all probably referring back to old stereotypes. Like the one regional people don’t have much money: Who said? There’s a lot of myths like that to bust,” the CMO added.

Ethnographic data can be another eye-opener. A case study discussed is that of IKEA, which only began advertising in regional Australia after receiving clear feedback from home visits with customers. These customers stated they were buying from other furniture stores because they didn’t know IKEA sold online. This is despite IKEA talking about its ecommerce offering for several years – unfortunately, to a metro-only audience.

With regional markets the fastest growing areas for ecommerce according to Australia Post, this was too good an opportunity to miss for IKEA, which swiftly planned a campaign to test in a select few regional markets. The result was a 31% lift in website traffic from regional audiences.

A reset on customer expectations

Inspiration Paints marketing director, Joel Goodsir, said its physical store footprint naturally weighted the retailer’s advertising towards regional. With regional consumers sometimes driving 200km to get to its stores given the prohibitive costs of shipping paint, the advertising window is larger as a consequence.

“Capital cities have a 3-5km around stores as you’re not going to drive past two Bunnings and a Mitre 10 to get to us. But in regional areas, people are coming up to 200km away,” he said. “You can own a town of 80,000 people so cheaply comparatively.”

To manage this regional marketing approach most effectively, Inspiration Paints breaks the country into 30 regions, each getting a bespoke marketing plan. Some regions could be one store; others could be 10 stores in the upper NSW mid north coast. Regional and metro areas are managed by different media agencies as Goodsir admitted he didn’t completely trust a metro-oriented media planner to understand regional.

Other attendees acknowledged there can be distribution challenges into regional areas for physical goods providers. But here again was another customer expectation distinction between metro and regional several brands have since realised doesn’t hold up in practice.

“We were coming at the problem with urban expectations and concerns consumers might be unhappy to wait longer to receive their online orders,” Costi said. “But once we spoke to our customers in regional areas, we discovered delivery expectations for regional areas were longer than those of metro customers when receiving online purchases. We realised that the focus needed to be on providing access.”

In one case, a week-long wait was so much preferred to no access at all that Blooms received a highly appreciative customer calling to say thank you.

Embracing a broader mix of channel

Another area of discussion was what media works in regional areas. Marketers and agencies are often accused of seeking out the shiny new toy, and with performance media continuing to provide short-term impact, the heavy weighting on digital channels was acknowledged by many in the room. Several flagged a CPA mindset as one of the inhibitors to building a case for regional media investment.

Then there’s channel choice itself. Brands active in regional areas agreed traditional channels, including direct mail, radio, local newspapers and out-of-home, continue to perform well in these markets. Blooms the Chemist, for example, finds direct mail, while difficult in metro areas, performing brilliantly in regional areas, Costi said. It also focuses on regional radio and local newspaper print ads and inserts.

Inspiration Paints does a lot of free-to-air, plus radio and catchup TV, and Goodsir said it’s able to dominate in those markets as a result. The retailer’s brand awareness in regional is double what it is in metro.

“In a time where marketers are needing to do more with less, regional offers a new audience to deliver brand growth at a fraction of the cost,” Boomtown marketing lead, Leanne Glamuzina said. “The audience is more engaged as there is less clutter and competitors, which equals greater cut through.”

The Boomtown collective, which represents media operators with both metro and regional assets, offers a Boomtown Hub which is designed for brands to explore the media available to them in each regional market and streamline access to information and planning.

A senior marketer from a banking group said she’s been using her useful agency background to talk about the share of voice internally and build appetite for more regional media investment.

“Talking about share of voice and the fact there is less clutter, which means you’ll get this much more return, is the conversation they’re willing to have internally – one based on numbers. Whereas if I said you should do activities in regional Australia, they’d say yes, but is it profitable? Or are you just saying I should?”

Prioritising experimentation

As noted, curiosity often gets halted due to a lack of appetite – or successful agitating - for investment to go beyond the CPA. Born out of being digital, the CMO of the premium digital subscription business said its media approach has been highly channel led and CPA driven, to the point where it’s only been a handful of years since the business has gone on journey of brand and “is still not very through the line”.

“We still come back to that question: ‘Did ad dollar drive new subscriber’. That’s where just looking in totality has meant there’s never really been a need to go where are we going to get that new incremental user from,” the CMO said. Gaining a better understanding around what overindexing in Mackay really means then acting on it are also stumbling blocks.

“It’s not just complexity, it’s the topline ROI uplift opposed to effort and the dollar,” the CMO said. 

A telco brand CMO at the table was struggling with similar issues. “We have so much data, we struggle to then go ok, let’s geolocate, and our CPAs start to go up a little. I reckon we have more share to go in different areas but it’s been that tension for us,” the marketing chief said.

This is where the need for experimentation and testing is so important. Glamuzina advised testing a few markets and closely monitoring the results. For brands looking for comparative numbers, the first step could be trying large regional urban cities such as Newcastle, the Gold Coast, Canberra or Hobart.

“When you hear success stories from brands like Koala and Ikea, who have tested markets, it demonstrates that it works,” she said.

Another brand that’s done this is value-based telco Belong, which initially tested in eight markets with a key goal of driving awareness in four specific submarkets: Cairns, Newcastle, Wollongong and Darwin. Five of the eight markets Belong targeted were successful in terms of overall uplift results. In all, the campaign exceeded expectations, surpassing the initial target of new sales. A further win was a +20% uplift in brand awareness. Belong’s regional mobile campaign acted as a catalyst for rolling through a regional approach into BAU marketing, targeting and strategy overall and today, with 30% of Belong’s mobile base in regional areas, the split on media spend matches it.

“Continue to test markets that feel right for your brand and audience,” Glamuzina advised. “You will begin to realise the population now living in some of these urban cities outside of metro are a valuable audience who are more diverse, successful and younger than ever before.”