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Local TV Ad Revenue Expected to Grow 8%

Local TV ad revenues are expected to grow 8% to $20.7 billion, according to a new forecast from BIA/Kelsey.

Last year station revenues were down following a huge political year in 2012. Over the air ad revenues were down 8.5% to $18.4 billion. The industry also generated $700 million in online revenues.

"This year there will be a significant uptick in ad revenues driven by political ads in hotly contested states," said Mark Fratrik, senior VP and chief economist, BIA/Kelsey. "Additionally, we're seeing the ability of local stations to maintain their loyal advertiser base, which means they consistently receive recurring ad revenue that boosts their profitability."

For the stations, the top client categories included: auto dealers ($3.5 billion), wireless telecommunications ($722 million),  hospitals ($652 million) and full service restaurants ($558.3 million).

The  television industry is experiencing competition from digital video.  Over the next five years, BIA/Kelsey says, online video will experience a strong annual growth rate of 31.5% and out-of-home video will grow 9.2%. As a result of these changes, local television's share of local video in 2018 will decrease from 67.5% in 2013 to 59.4% in 2018.

"To defend against the competition, local stations must become more sophisticated with the services they offer advertisers," said Rick Ducey, managing director of BIA/Kelsey. "To get a valuable leg up on the other platforms they compete against, television stations are in the perfect position to deliver full-service digital agency services to local clients. As we work to help our clients build out their online offers, to include local online video options, we are seeing the effort net a valuable payoff."