2011 Forecast: Local TV Ad Revs Drop 10%, Digital Climbs

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The absence of big Olympics and political advertising will pull down local TV advertising revenue almost 10% in 2011.

Local media research firm BIA/Kelsey is estimating that local TV advertising revenues will sink 9.8% to $17.4 billion, down from $19.4 billion in 2010. But online/digital revenues for local TV stations will climb 22% to $550 million.

2010 was the first year since 2006 that witnessed year-over-year gains -- improving 23.2% over 2009's deep recession-scarred performance, which pushed down local advertising revenues to $15.8 billion.

For the better part of two decades, TV stations have been subjected to two-year cycles: soaring gains from Olympics and political advertising dollars in one year, followed by declines with their absence the following year.

True to form, BIA/Kelsey estimates the local TV advertising market will recoup virtually all its 2011 declines in 2012, rising to $19.3 billion. Local TV-connected digital advertising will continue to gain strength -- a 15.8% hike to $638 million.

However, research suggests that TV stations will not top the big $20 billion totals in recent years -- 2005 to 2008 -- before the recession hit anytime soon. The 2006 year was at an all-time high of $22.8 billion. By 2015, BIA/Kelsey projects local TV station advertising revenues of $19.5 billion -- virtually the totals of 2010. But it says local TV stations' digital advertising revenues will continue to climb, topping to $890 million.

Local TV -- as with all broadcast TV -- continues to witness lower ratings. But business continues to be steady.

Mark Fratrik, Ph.D., vice president of BIA/Kelsey, stated: "Even with some erosion of viewers, it was a strong demonstration that local television continues to show its value to advertisers by delivering the shoppers, voters, and influencers they want to reach."

BIA/Kelsey says revenues for the overall local media advertising marketplace -- as defined by media that provides local audiences to all types of advertisers -- will grow at a 2.4% compound annual growth rate over the next five years, reaching $153.5 billion by 2015.

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