National advertisers will spend more local dollars on mobile than online media in 2017, according to a new study by BIA/Kelsey. The report projects that national spend on local-mobile media will increase six-fold over the next five years, jumping from $1 billion in 2012 to $6.4 billion five years later. By comparison, national spend on online local media will grow from $4.3 billion in 2012 to $6.3 billion in 2017.
Brands have played a critical role in the early life of mobile. The research firm found that national advertisers accounted for 85% of total spend on local mobile media last year — nearly double the share that brands accounted for in online. It’s an imbalance that will calibrate over time as less-savvy local advertisers move spend to mobile, says Mark Fratrik, vice president and chief economist at BIA/Kelsey.
“Largely because it’s newest, mobile has been adopted by national advertisers a little quicker than the local guys,” Fratrik told Street Fight in an interview. “The national brands employ big advertising agencies that allow them to be farther along the adoption curve in general when it comes to [new channels].”
Last year, national advertisers accounted for a little less than one third of spend on local media (including traditional as well as digital channels). BIA/Kelsey projects that percentage to inch up slightly, with national spend increasing from $42.5 billion in 2012 to $51 billion in 2017 — or 34% of total revenues.
Overall, digital has garnered much more interest from national advertisers than traditional media channels like yellow pages, newspaper, and radio. Online saw twice the involvement of national advertisers than newspapers in 2012, and the ubiquity of real-time location on mobile will likely draw even greater interest from brand advertisers than online local media.
But mobility also introduces some larger questions about the taxonomy of “local advertising,” as an industry. Take the recent push within the mobile display sector to leverage location as a proxy for audience segmentation. If a company uses location as a way to determine a consumer’s relationship to a certain audience segment, rather than place, is it still local? As Greg Sterling pointed out in a recent blog post, location is becoming a means to an end, rather than an end in its self.
Steven Jacobs is deputy editor at Street Fight.