BIA/Kelsey: Local Ad Rev To Hit $149B In 2017

In its new U.S. Local Advertising Forecast 2017, BIA/Kelsey projects total local advertising revenues in the U.S. to reach $148.8 billion in 2017, up from $145.2 billion this year, representing a growth rate of 2.4%. BIA/Kelsey defines local advertising as all ad platforms that provide access to local audiences for national, regional and local marketers.

Faster growth in online/digital advertising revenues is a major component of the projected increases in the overall local advertising pie. BIA/Kelsey estimates online/digital will increase at 13.5%, from $44.2 billion in 2016 to $50.2 billion in 2017. That compares with a decrease of 2.4% next year for traditional — print and over-the-air — advertising revenues, going from $101.1 billion in 2016 to $98.6 billion in 2017.

“A range of factors will drive local ad revenues higher in 2017 and through the end of the next year,” said Mark Fratrik, SVP and chief economist at BIA/Kelsey. “An improving U.S. economy, increased spending by national brands in local media channels, extraordinary growth in mobile and social advertising, and the continued expansion and selection of online/digital advertising platforms. In fact, we are predicting that online/digital local ad share will exceed the share of print media by 2018.”

Online/digital revenues are generated by online companies that sell locally targeted advertising that includes display, search and classified/vertical advertising. The advertisements are sold by local pure-play online companies, national online companies offering geo-targeted advertising, and local traditional media groups’ online/digital efforts.

The forecast examines the growth and opportunities in the different areas of online/digital:

• Local desktop display (inclusive of video and social) is expected to have a 10.3 percent  compound annual growth rate (CAGR), as improved broadband access makes more high quality online streaming and sharing of content easier.

• Local search on desktop devices will grow at a 5.7 percent CAGR. As more search activity takes place on mobile devices, mobile is cannibalizing search dollars from desktop. However, ultimately the local search dollars still go to the same giant players (Google/Bing) that have footholds in both channels.

• Email is expected to grow at a 4.7 percent CAGR, driven by volume increases with consumers choosing to opt in to more lists of their favorite businesses. The mutually beneficial relationship allows consumers to stay informed of the latest offerings and promotions while generating repeat business for firms.

BIA/Kelsey will present highlights from the local online/digital segment of the forecast at its upcoming conference, BIA/Kelsey NEXT: The Future of Local Digital Advertising and Marketing, which takes place Dec. 5-7 in Boston.