Follow The Money Dep’t: Local Media Digital Spend Strong And Growing
March 22, 2012 by Dave Haynes
The research consulting firm BIA/Kelsey’s newest U.S. Local Media Forecast (for 2011-2016) anticipates strong growth in the digital segment of local media advertising through 2016.
The firm anticipates local online/interactive/digital advertising revenues will climb from $21.2 billion in 2011 to $38.5 billion by 2016, a compound annual growth rate (or CAGR for you MBA types) of 12.7%. The figure lumps in mobile as part of digital, but makes no specific reference to Digital OOH. The Local Media Forecast covers newspapers, direct mail, television, radio, print Yellow Pages, out of home (but not-digital), cable television, magazines, online/interactive, mobile, Internet Yellow Pages, and other interactive revenues generated by traditional media players.
So … for hyperlocal Digital OOH, choose your bucket.
The U.S. economy remained slow through most of 2011, owing to a variety of factors including concerns about the European economic crisis, continued high unemployment and the housing market’s lack of recovery. These factors led to consumers and businesses “holding back” in their spending. The weaker than expected level of economic activity resulted in a lower level of local advertising revenues.
“In October, we projected the total of the U.S. local media market to be $135.9 billion in 2011,” said Mark Fratrik, vice president and chief economist, BIA/Kelsey. “But we now expect it to be $132.8 billion. Based on the changes in our estimates going forward, we expect the overall local media market will grow a bit more slowly over the next five years.”
BIA/Kelsey forecasts total local media ad revenues to grow from $132.8 billion in 2011 to $151.3 billion in 2016 (CAGR: 2.6%).
The firm expects traditional local media revenues to grow from $111.5 billion in 2011 to $112.7 billion in 2016 (CAGR: 0.2%). Predictably, traditional media revenues experience a bump during election years from political advertising, which appears as a drop in revenues in odd-numbered years. Despite the year-over-year political advertising seesaw effect, traditional media revenues remain remarkably steady throughout the forecast period.
The research also shows rapid growth in digital’s share of ad spend (see chart).