According to the BIA/Kelsey U.S. Local Media Annual Forecast (2009-2014), the U.S. local advertising market to reach $144.9 billion in 2014, representing a modest compound annual growth rate of 2.2 percent from 2009. A closer look at the forecast period reveals, following a significant contraction in 2009, local media spending is expected to be slow through 2011, with meaningful recovery beginning in 2012.
Traditional local spending, after a dramatic plunge in 2009, will continue a downward trajectory through 2011 and will not recover to earlier spending levels. But rising spending on the web will fuel overall increases in the local space from 2010 through 2014.
Overall, local advertising is growing slightly faster in 2010 compared with earlier estimates, according to the report. Two media categories that have seen greater than expected growth in 2010 are television, up 13 percent over 2009, due to stronger political advertising, and online advertising, up 30.2 percent over 2009.
The growth of online local ad spending, along with the stagnation of traditional efforts, will mean online takes an ever greater slice of the local advertising pie in coming years. Online has already increased its share by 50%, from 10% in 2008 to 15% this year. By 2014, BIA/Kelsey expects nearly one in four local ad dollars to be spent on digital.
Local Ad Spending (2008-2014, $Billion)
Source: BIAKelsey, September 2010
The study defines local media as ad spending by small and medium-sized businesses and national or regional advertisers making local buys. Local ad revenues comprise traditional and online/interactive segments (TV, radio, Yellow Pages, OOH, cable, magazine, newspapers, direct mail, online/interactive, E-mail/reputation management and mobile)
Neal Polachek, president, BIA/Kelsey, predicts that "... even with improvements in the overall economy, we do not anticipate a rapid recovery among traditional media over the forecast period, because... the structural change in the local media industry has accelerated."
Among the key drivers of this year's forecast, says BIA/Kelsey, are:
· Larger than previously forecast declines in newspapers and direct mail
· Slowing growth of the interactive/online sector, including search, display and classifieds
· A further ramp-up in political advertising, due to the recent U.S. Supreme Court decision, which will benefit the traditional television and radio sectors, as well as the interactive and direct mail sectors
The forecast reveals 55% of all ad spending is with local media, defined in this forecast as spending by small and medium-sized businesses and national advertisers or regional advertisers making local buys. In 2009 total U.S. ad spending was $235.6 billion (based on BIA/Kelsey's estimate of the local segment and estimates by several market forecasters focused on national spending). Of that, the study estimates $130.2 billion was spent on local ad buys, with $105.4 billion attributed to national advertising.
For additional information, please visit BIA/Kelsey here.