Local media research firm BIA/Kelsey has released its U.S. Local Media Forecast for 2011-2016, and while overall growth in the local advertising sector has been revised downward slightly from what the company initially projected, the firm does expect substantial continued growth. In particular, the report predicts rapidly growing strength in the digital and interactive segment.
According to a news release, the report forecasts total U.S. local advertising revenues at $151.3 billion in 2016, up from $132.8 billion in 2011 — an increase of nearly 14 percent. Its 2011 projection has been revised slightly downward from the firms October peg of the market at $135.9 billion. The release states that there are a variety of factors contributing to the downward revision, including the European economic crisis and continued high unemployment in the U.S. — which has lead both consumers and businesses to “hold back” on their spending (on goods/services and advertising, respectively). The slowdown resulted in a 2.4% decrease compared to 2010.
In addition to this slowing of revenue growth for total local media revenue, BIA/Kelsey predicts an annual growth rate of just 0.2 percent in traditional local media advertising revenue between 2011 and 2016.
While traditional media growth may be slowing, though, the firm states that digital and interactive local advertising will see a large amount growth through 2016. The forecast shows that online/interactive/digital advertising revenues will see an annual compound growth rate of 12.7 percent, including revenue from the mobile market. The report pegs the digital segment at $38.5 billion in revenues by 2016, which would be up from the $21.2 billion in 2011.
The firm states that this rise in digital will offset the lack of new revenue expected in the traditional media, and a greater percentage of local spend will be in digital in each successive year. By 2016, digital will constitute 25.5% of local advertising revenue, up from 16% in 2011.
Isa Jones is an intern at Street Fight.