Report: Local Digital Revenue to Reach $38.1B by 2016

BIA/KelseyA new BIA/Kelsey forecast projects moderate growth in advertising revenue for all local media through 2016, with much more rapid growth for online, digital and interactive advertising.

In its updated U.S. Local Media Forecast, BIA/Kelsey says its analysts anticipate local media advertising revenues to reach $147.1 billion by 2016, at a 2.1% annual growth rate and more specifically online, interactive and digital ad revenues to reach $38.1 billion that same year, at an annual growth rate of 12.4%. Within the local media sphere, search is expected to encompass a slim majority, 51%, of online ad revenues, with the local search market, projected to reach $10.2 billion by 2016, outpacing the rate of growth of overall search. The report also projects 16.2% annual growth in the local display market, reaching $5.1 billion by 2016.

Local media ad revenues are projected to hit $134.6 billion in 2012, up from $132.7 billion in 2011. In the forward-looking report, BIA/Kelsey sees the largest year-to-year growth expected to come between 2015 ($142.1 billion) and 2016 ($147.1 billion). But even as online local media ad revenues are expected to grow, traditional local media, though still pulling in a clear majority of 2011’s ad revenues, is projected to see its own, legacy model ad revenues fall 0.4% annually. Local online ad revenues, currently accounting for 16% of local media ad revenues overall, should reach a 25.9% market share by 2016.

The traditional heavy hitters — direct mail, TV, newspapers and radio — will continue to attract the most ad dollars in 2016, BIA/Kelsey says, but analysts are particularly high on online/interactive, projected to be 10.2% of local media revenues by 2016 (excluding digital revenues raked in by traditional media sources), and mobile, 2.7%.

Local Media Revenue Sources in 2016

“Overall, we remain very bullish on interactive spending, and especially on new mobile monetization methods like point-of-sale offerings that are showing performance improvements,” said Matt Booth, chief strategy officer and program director of BIA/Kelsey’s Interactive Local Media. “In fact, we expect mobile growth to offset some of the slowing in core search and display in the outer years of the forecast.”

“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,” added Mark Fratrik, BIA/Kelsey’s vice president and chief economist, in a release. “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.”

Patrick Duprey is an editorial assistant with Street Fight. Follow him on Twitter @PatrickJDuprey.