Local Digital Ad Revenues to Nearly Double to $42.5B by 2015 from $21.7B in 2010

BIA/Kelsey Forecasts U.S. Local Digital Ad Revenues to Nearly Double to $42.5B by 2015 from $21.7B in 2010

The firm’s newly released U.S. Local Media Annual Forecast indicates digital media will represent 23.6 percent of all local advertising by 2015

CHANTILLY, Va.and BOSTON, Mass. (March 21, 2011) – Local advertisers continue their steady migration to digital media platforms, according to BIA/Kelsey’s U.S. Local Media Annual Forecast (2010-2015). BIA/Kelsey, adviser to companies in the local media industry, expects online/interactive advertising revenues to climb to $42.5 billion by 2015, almost double 2010’s $21.7 billion, representing a compound annual growth rate (CAGR) of 14.4 percent. This growth coincides with anticipated improvement in the U.S. economy and a continued rise in overall local advertising, which the firm expects will reach $153.5 billion in 2015, up from $136.3 billion in 2010, representing a 2.1 percent CAGR.

As digital media — delivered to consumers through mobile, Internet or other electronic methods — continues to gain traction with local advertisers, BIA/Kelsey predicts it will represent 23.6 percent of all local ad spending by 2015.

“As the business climate improves and advertisers step back into the market, they are gravitating to digital options that perhaps were not as mature before the recession began,” said Tom Buono, chief executive officer, BIA/Kelsey. “Our analysis indicates that as advertisers move to online, mobile and, particularly, the variants of social media, we are fast approaching a tipping point where digital media will soon become a dominant segment of the local advertising marketplace.”

BIA/Kelsey reports among the key drivers of this year’s forecast are:

• The increased number of smartphones and tablets is already playing a role in affecting revenue shares earned by traditional media.
• Continued significant newspaper revenue erosion will drive pay walls and other creative approaches for rebuilding revenue base.
• Intense political advertising and uptick in national advertising lifted television and other media revenues in Q4 2010, increasing prospects for the forecast period.
• The interactive/online sector continues to advance and multiply with new formats such as social and mobile.

“What we’re seeing in terms of media share shifts and transformation is really unprecedented,” said Neal Polachek, president, BIA/Kelsey. “As we look forward, the core issue challenging advertisers is to figure out a media plan that leverages the transactional nature of digital media with the scale and reach of traditional media.”

BIA/Kelsey’s U.S. Local Media Annual Forecast also notes that social forms of digital media are increasingly becoming an important component of online revenues. Consumer spending on deal-a-day offers, which the firm expects will grow to $3.9 billion by 2015, illustrates an expanding market that includes Facebook and Twitter.

Topline numbers from the forecast were presented to some 500 local media industry executives this morning at BIA/Kelsey’s Interactive Local Media East conference, which is being held today through Wednesday at the Boston Marriott Copley Place.

via BIA Kelsey – Press Releases.