Local Advertising Revenues Forecast To Exceed $150 Billion In 2018

Total local advertising revenue in the U.S. is forecast to reach $151.2 billion in 2018, according to research firm BIA/Kelsey in its U.S. Local Advertising Forecast 2018. The 2018 forecast represents growth of 5.2 percent of 2017’s figure, $140.9 billion. Traditional media will comprise 64.7 percent of the revenue, with online/digital media securing 35.3 percent. BIA/Kelsey defines local advertising as all advertising platforms that provide access to local audiences for national, regional and local marketers.

"The strong economy and the expectation of highly competitive statewide political races next year reinforce our outlook that local advertising revenue will show strong growth in 2018, in fact, higher than we've seen for five years," says Mark Fratrik, chief economist and SVP at BIA/Kelsey. “Combine these factors with the continued strength of traditional and online media, and the revenue landscape for next year looks robust."

BIA/Kelsey’s forecast highlights that direct mail preserves its lead position with a 25.4 percent ($38.5 billion) slice of the local advertising pie. It notes that high response rates of around three to five percent, and a return on investment comparable to some digital media, combine to make direct mail appealing to advertisers. Local television continues in second place at 13.8 percent ($20.8 billion), and is expected to be the largest player (more than 60 percent) in the local video advertising market. Revenue growth within the total local video advertising segment will come from local mobile video (growing to more than $1 billion) and local online video (increasing to more than $2 billion).

Mobile media moves into the third position, representing 12.6 percent of the local advertising spend in 2018. This category will grow to 19.2 percent by 2022. Adoption of mobile local advertising tactics—geofencing, click-to-call, click-to-map, etc.—continues to grow among national advertisers. The forecast also projects significant ad spending in native social advertising next year due to its ability to target and reach local consumers. Social media ad revenues from mobile devices (not including tablets) now represent about 71 percent of total social ad spending and will grow to nearly 80 percent by 2022 as more of the user activity shifts away from desktops.

“Social channels such as Snapchat and Instagram have evolved their mobile native ad models to include new targeting and reporting features,” Fratrik adds. “As mobile and social local channels continue to deliver high performance results for advertisers, advertising dollars will flow to these areas. Indeed, pushed by increased consumer use, agencies will budget more of their spending into locally activated mobile products and services.”

filed under December 2017
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