Modest Cable Local Ad Revenue Growth: BIA/Kelsey 5-Year Forecast

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Cable's share of local video ad spending will drop from 22% this year to 18% by 2019, akin to the decline that local broadcast TV channels face as their ad revenue share falls from 64% to 58% during the same period, according to the new "U.S. Local Media Forecast 2015" that research firm BIA/Kelsey  unveiled this week. Local online video advertising will attract most of the diverted ad spending, with its share growing from 9.6% this year to 18.7% in 2019, according to the analysis.

Local cable advertising, which BIA/K pegs at $6.9 billion this year, will drop slightly in 2015 and then teeter upwards for a few years, settling at $7.4 billion in 2019.  [See chart.]

Throughout the media world, the next few years will see a "steady shift toward digital media," the BIA/K report concludes.  Today's ad spending split between "traditional" media (77%) and digital media" (23%) will migrate to a 65%/35% split by decade's end.

"We expect the pace of growth in the overall local advertising marketplace to moderate through 2019, resulting in a 3% compound annual growth rate," said Mark Fratrik, chief economist at BIA/Kelsey. The standout will be the online/digital advertising sector.  Fratrik expects revenues in that category to see a 12.2% CAGR through 2019, compared with essentially flat revenues for traditional advertising (-0.5% CAGR) during the same period.

Reflecting current changes in advertising economics, BIA/Kelsey has lowered its overall local ad spending forecast for 2014 (including all media) to $137 billion, down from its original $138 billion forecast.  The company expects "a slight increase" to $139.3 billion next year, "reflecting a slightly stronger U.S. economy."

Online/digital will account for more 25.2% of total local media revenues in 2015, BIA/K's study predicts. "Mobile local" and "local social" (including "search") will lead the growth in this sector.  BIA/Kelsey foresees:     

  • Mobile local ad revenues will grow from $4.3 billion in 2014 to $6.6 billion in 2015
  • Local social media revenues will grow from $2.5 billion in 2014 to $3.6 billion in 2015.  
  • Local search revenues will grow from $7.1 billion in 2014 to $7.2 billion in 2015
  • Local display revenues will grow from $4.3 billion in 2014 to $4.9 billion in 2015
  • Local online video revenues will grow from $2.3 billion in 2014 to $3.0 billion in 2015

BIA/Kelsey released its forecasts during its "Leading in Local" conference in New Orleans this week.

Gary Arlen
Gary Arlen

Contributor Gary Arlen is known for his insights into the convergence of media, telecom, content and technology. Gary was founder/editor/publisher of Interactivity Report, TeleServices Report and other influential newsletters; he was the longtime “curmudgeon” columnist for Multichannel News as well as a regular contributor to AdMap, Washington Technology and Telecommunications Reports. He writes regularly about trends and media/marketing for the Consumer Technology Association's i3 magazine plus several blogs. Gary has taught media-focused courses on the adjunct faculties at George Mason University and American University and has guest-lectured at MIT, Harvard, UCLA, University of Southern California and Northwestern University and at countless media, marketing and technology industry events. As President of Arlen Communications LLC, he has provided analyses about the development of applications and services for entertainment, marketing and e-commerce.