Commentary

Local Search Advertising Revenue To Reach $9.5 Billion In 2020

BIA/Kelsey projects that local search advertising revenue in the United States will rise from $7.8 billion in 2015 to $8.2 billion in 2016, $8.5 billion in 2017, and $9.5 billion in 2020.

Search will contribute to the total local advertising revenue in the U.S. of $146.6 billion in 2016 -- up from $141.3 billion this year, representing a compound annual growth rate (CAGR) of 3.75% in its U.S. 

The Local Advertising Forecast 2016 estimates that online digital revenue will grow to from $38 billion in 2015 to $42.6 billion in 2016 -- about 29.1% of total local media revenue.

Local display advertising -- which consists of local video and other types of display advertising -- is also climbing steadily, reaching $5.8 billion by 2020 and up from $4.4 billion in 2015.

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Mobile video revenues will grow from $0.4 billion in 2015 to $0.7 billion in 2016. Location-targeted mobile advertising spend will rise from $8.5 billion in 2015 to $11.3 billion in 2016, and $26.7 billion in 2020.

Social local media revenue will grow from $2.4 billion in 2015 to $3.3 billion in 2016.

BIA/Kelsey defines local advertising as all advertising platforms that provide access to local audiences for national, regional and local marketers.

BIA/Kelsey based its estimates on moderate growth for the U.S. economy in 2015. While the gross domestic product (GDP) declined in the first quarter, it showed tepid growth in the remaining quarters, per the report. "Employment gains continued in 2015, although they slowed somewhat in the third quarter," the report says. "The significant number of discouraged workers continues to limit wage gains."

As a result of stronger mobile and social advertising, BIA/Kelsey slightly increased its total advertising estimate for 2015 to $141.3 billion. For 2016, the analyst firm expect a moderate increase to $146.6 billion, resulting from a slightly stronger U.S. economy and a substantial amount of political advertising.

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