Local online ad spending will increase at an annual rate of 12.7% between 2011 and 2016, nearly doubling from $21.2 billion to $38 billion during that period. Digital growth will offset slower-than-expected gains in total local media ad revenues, projected to increase only 2.6% annually, according to a BIA/Kelsey forecast.
Because of a mostly sluggish U.S. economy through 2011, the local media research firm scaled back its estimate of the overall U.S. local media market to $132.8 billion from $135.9 billion last year. The slowdown, triggered by the European financial crisis, continued high unemployment and the lagging housing market, led to a decrease of 2.4% from 2010.
Traditional local media revenues are projected to be essentially flat in the coming years, rising from $111.5 billion in 2011 to $112.7 billion in 2016. Even with a bump in political ad spending in 2012, traditional ad spending will increase from $700 million to $112.2 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,” said Mark Fratrik, vice president/ chief economist at BIA/Kelsey. At the same time, the proportion of local ad dollars captured by digital media is expected to increase from 16% in 2011 to 25.5% in 2016.
BIA/Kelsey defines local advertising as some form of targeted messaging to specific geographic markets spent by national, regional and small-to-medium-sized businesses. Online/interactive ad spending figures include the digital out-of-home category.