Digital Ad Revenues Highlight Local Media Forecast

According to the BIA/Kelsey's newly released U.S. Local Media Forecast, local online/interactive/digital advertising revenues - including mobile - will climb from $21.2 billion in 2011 to $38.5 billion by 2016, representing a compound annual growth rate (CAGR) of 12.7 percent.

The growth in the digital segment will offset slower than anticipated growth in total local media advertising revenues.

A variety of factors including concerns about the European economic crisis, continued high unemployment and the housing market's lack of recovery led to consumers and businesses "holding back" in their spending, the report concluded. The weaker-than-expected level of economic activity resulted in a lower level of local advertising revenues.

"In October, we projected the total of the U.S. local media market to be $135.9 billion in 2011," says Mark Fratrik, vice president and chief economist, BIA/Kelsey. "But we now expect it to be $132.8 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."

BIA/Kelsey forecasts total local media ad revenues to grow from $132.8 billion in 2011 to $151.3 billion in 2016 for a CAGR of 2.6 percent. The firm expects traditional local media revenues to grow from $111.5 billion in 2011 to $112.7 billion in 2016, a 0.2-percent CAGR.

Predictably, traditional media revenues experience a bump during election years from political advertising, which appears as a drop in revenues in odd-numbered years. Despite the year-over-year political advertising seesaw effect, traditional media revenues remain remarkably steady throughout the forecast period.