Facebook, Google Dominant In Local Ad Market

Broadcasters wondering where local advertising dollars are going need only to click on Facebook.

Since 2012, when the social media giant began offering simple do-it-yourself ad buying, it has “blossomed into the most popular form of local marketing” with 24 consecutive quarters of 30% growth or more, according to a new report from Borrell Associates, 2019 Benchmarking Local Media’s Digital Revenues.

“Those expecting the social media juggernaut to collapse due to data breaches, fake news and reports of click fraud may have more hope than reality in their expectations,” the report says.

“Our surveys of local advertisers have shown consistent gains in effectiveness ratings, to the point at which 74% of local ad-buyers surveyed said they felt Facebook was moderately to extremely effective.

“Local ad agencies, who possess more marketing savvy, felt even stronger; 85% rated it moderately to extremely effective.”

The report does not put dollars to Facebook growth, but it says that digital-only media — pure-plays in Borrell’s parlance — surged to nearly $60 billion local revenue in 2018 and that Facebook and Google accounted for more than 70% of that total.

Picking up the pure-play digital scraps were the likes of Craigslist, Zillow and Yelp, the report says.

Due mostly to Facebook and Google, total digital — pure-plays plus the digital offerings of legacy media — now account for $67.4 billion or 53% of the $126.3 billion in total local advertising spending.

“We expect digital to plateau at about a 63% share of local advertising, by 2020, when it should hit and hold at about $77 billion,” the report says.

Digital has drawn in all the legacy media, the report says. “Today, nearly 80% of the army of 60,000 ad sales reps sell some sort of digital advertising or marketing service in tandem with their print, broadcast, outdoor and cable offerings. In 2018, their efforts drove $10.3 billion in digital ad sales for their companies.”

Among legacy media, the reports says that broadcast TV became the No. 1 local ad medium in 2018, with an 9% share of the total local ad spend of $126.3 billion, outpacing newspapers for the first time.

“The fact that political advertising hasn’t yet migrated so heavily to digital media has certainly helped broadcast TV,” it says. “In 2018, political spending on broadcast TV outlets totaled $3.5 billion in 2018, or 39% of all political advertising,”

Broadcast TV will remain to the top shareholder in 2023, although its share of the total will dip to 7%, it says.

The report contains a chart ranking 26 legacy U.S. and Canadian local media companies by the percentage of their total revenue that comes from digital.

The list was dominated by newspaper and yellow page companies, but four TV station groups made the second division — Nexstar and Tegna (tied at No. 17 at 17.8%), Tribune Media (No. 24 at 5.2%) and Meredith (No. 26 at 2.8)

“Competition from localized pure-play digital companies falls into two categories: those with a physical presence and local sales force, and those with no physical presence and no sales force in that market.

“The larger localized pure-plays include AngiesList/HomeAdvisor, Autotrader and Craigslist. Each had revenues exceeding $1 billion 2018.

“While localized pure-play sites may each take small nicks from the market, they account for 10% to 15% of local digital advertising.”