| ||||||||||||
The nearly two-year recession has seen steep declines across all kinds of advertising, but some of the biggest hits are coming in local advertising -- one of the biggest categories for traditional media like newspapers, radio and broadcast TV. In all three, the recession appears to be speeding up the flight of local advertisers to online platforms, including local search.
Total local ad spending for newspapers, radio and broadcast TV has declined from a total $12.5 billion in the first quarter of 2005 to just $8.5 billion in the first quarter of 2009, a 32% drop.
This includes a $3 billion decline following the first quarter of 2008, when revenues were about $11.5 billion. However, the steady declines in the years before the recession began suggest that there are long-term structural forces at work -- mainly competition from the Internet, which has soared as a local ad medium.
It's hard to know with certainty that local advertisers have switched dollars from traditional media to online platforms, but the rough similarity of numbers suggest such a dynamic at work.
Although quarterly figures are not available, local online ad spending rose from $4.8 billion in 2005 to $12.6 billion in 2008, an increase of $7.8 billion. Total local ad spending for newspapers, radio and broadcast TV fell from $54.6 billion in 2005 to $48.9 billion in 2008, a decrease of $5.7 billion.
Where local revenue growth rates have gone increasingly negative for traditional media, local online spending was booming from 2005-2008, with annual growth rates of 78%, 19%, 31.6% and 68%, respectively.
By contrast, from 2005-2008, newspapers' local advertising revenue (often referred to as "retail") saw growth rates of 0.8%, -0.3%, -5% and -10.7%, respectively. Over the same period, radio posted local revenue growth of 0%, -5%, -2% and -10%, respectively; and local broadcast TV saw growth of -8.8%, 11.5%, -9.5%, and -2.4%, respectively.
The declines are all the more noticeable because they include two national elections. In previous years, there was a bonanza of political ad spending for local media. But even generous local ad spending by candidates for Congress failed to boost newspapers or radio into positive growth in the third and fourth quarters of 2006 and 2008.
Broadcast TV managed to post positive growth in the second half of 2006, but turned in disappointing results in 2008, with total local spending slightly down compared to the same period in 2007. This means that local broadcast TV also failed to get an appreciable bump from the Olympics in August 2008.



One comment on "Cross-Media Loss: Local Ad Revenue Plunges "
Leave a Comment
You must be signed in to comment. Sign In