Forecast: Digital to Comprise More Than 15% of Local Ad Rev by 2016

The strong growth of digital revenue for local media will continue in 2012, according to a report from BIA/Kelsey. The company’s U.S. Local Media Forecast (2011-2016): Full Edition predicts a 13.1% increase between 2011 and 2012. Revenues from mobile search will jump 77.2%, while online video revenues will increase by more than 50%. Social will rise by 26.3%, less than was predicted this spring.

Additionally, BIA/Kelsey predicts digital advertising will comprise more than 15% of the $151.3. billion local media market by 2016. That latter number is an increase of more than 14% over 2011.

“We continue to see a dramatic increase in spending on online media and it is fundamentally changing the media planning and buying process for advertisers,” Mark Fratrik, BIA/Kelsey’s vice president and chief economist, said in a statement. “As businesses examine their advertising opportunities, the trend is moving toward building a coordinated ad plan across different platforms, with different messages across different media. With traditional media getting more than three-quarters of the total local media ad budget, coordination between traditional and online media is the best way to explore how to effectively optimize new media, such as social networks and online video, to increase the chance of achieving business goals.”

A nice, optimistic quote, but is the optimism earned? Yes and no. Digital advertising is growing, especially on the mobile side. According to BIA/Kelsey, some properties such as newspapers may only see advertising growth on the digital side in the coming years. That’s the good news. Growth is always good.

The flipside is that it’s easier to grow revenue when it’s small, especially by impressive percentages. So mobile, which will jump by more than 25% yearly, will still make up just 2.7% of the market by 2016. Granted, that means there is almost $4.5 billion being spent on local mobile advertising, but that’s not that much in the grand scheme of things. (Think of the massive number of places over which that $4.5 billion will be spread.)

The fact that $4.5 billion will be spent by local mobile — a section that didn’t exist 10 years ago — is great. But we have a long way to go until it’s going to challenge any of the more traditional models.

Noah Davis is a senior editor at Street Fight.