The weak economic environment should curtail overall local advertising spending in coming years, according to the U.S. Local Media Annual Forecast (2008-2013) study by BIA Advisory Services and its Kelsey Group division.
Local ad revenue will decline from $155.3 billion in 2008 to $144.4 billion by 2013, according to the report, which represents a negative compounded annual growth rate. Of all the local ad revenue segments, only interactive is expected to grow over the next five-year period, Kelsey Group reported. All other local media will experience marginal to rapid declines in the next 18 to 36 months, BIA Advisory Services president and CEO Tom Buono said in a statement. A small number of traditional media will rebound with a revived economy beginning in 2011, though most traditional media will continue to decline, albeit at a slower pace.
"By the end of the forecast period, the overall size of the local advertising market will be considerably smaller than it was at the end of 2008," Buono said. "As the shift to online accelerates, and the demand for accountability metrics grows, there is an increased urgency for traditional media companies to develop and embrace new business models that incorporate digital strategies in order to drive business over the next decade."
Many cable companies are beginning to launch online advertising programs to take advantage of the stronger online ad market. Comcast Spotlight has launched four advertising-supported Web sites in its Chicago and Midwest markets with some success. Mediacom Communications' On Media Sales unit has spent most of the last year developing an online advertising strategy. The company is expected to launch its online ad program this Spring.
BIA and The Kelsey Group project the interactive share of local ad spending will more than double from 9% in 2008 to 22.2% in 2013. According to the forecast, the interactive segment (encompassing mobile, Internet Yellow Pages, local search, online verticals and classifieds, voice search, e-mail marketing and other interactive revenue generated by traditional media players) will grow from $14 billion in 2008 to $32.1 billion in 2013, representing an 18% CAGR.
At the same time the research firm expects the traditional segment (encompassing newspapers, direct mail, television, radio, print Yellow Pages, non-digital out of home, cable television and magazines) will decrease from $141.3 billion in 2008 to $112.4 billion in 2013, a CAGR of -4.5%.
"Within the local advertising sector, there will be a real share shift, and the players most ready to leverage and adopt interactive models will achieve greater success going forward," Kelsey Group CEO Neal Polachek said in a statement. "The share shift we expect could actually be more pronounced if the major traditional media are not able to integrate new interactive products into their bundle. Successful integration will require considerable attention to business models, product innovation and sales channel evolution."
All other local media will experience marginal to rapid declines in the next 18 to 36 months. A small number of traditional media will rebound with a revived economy beginning in 2011, though most traditional media will continue to decline, albeit at a slower pace.
This was the first time BIA and Kelsey Group combined resources to create its local media forecast. The report covers nine key segments: newspapers, direct mail, television, radio, print Yellow Pages, non-digital out of home, cable television, magazines, and all digital and online interactive (which comprises mobile, Internet Yellow Pages, local search, online verticals and classifieds, voice search, e-mail marketing, and other interactive revenue generated by traditional media players).
The smarter way to stay on top of the multichannel video marketplace. Sign up below.
Thank you for signing up to Multichannel News. You will receive a verification email shortly.
There was a problem. Please refresh the page and try again.