Latest BIA/Kelsey forecast sees slow local ad growth through 2011

The latest forecast from BIA/Kelsey reveals any meaningful recovery in the local advertising market won’t take shape until 2012.

The projection, part of the company’s U.S. Local Media Annual Forecast (2009-2014), foresees ad revenue rising to $144.9 billion in 2014 — a compound annual growth rate of 2.2 percent from the 2009 level. According to the forecast, local media experienced a significant contraction in ad revenue in 2009 and will continue to see slow growth through 2011.

BIA/Kelsey also cautions that even a recovery in the larger economy isn’t likely to result in a fast recovery for traditional media because of an acceleration in the structural changes in the local media industry.

Kelsey forecasts spending on traditional media to decline from $115 billion in 2009 to $108.2 billion in 2014 — a negative compound annual growth rate of 1.2 percent. During the same period, spending on online/interactive media is projected to grow from $15.2 billion to $36.7 billion, or an annually compounded 19.3 percent.

One bright spot for traditional broadcast media over the next year will be political advertising, according to BIA/Kelsey. The recent U.S. Supreme Court decision lifting certain restrictions on political advertising will help radio and TV broadcasters as well as interactive and direct mail.

The forecast also shows that 55 percent of all ad spending is with local media, and that in 2009, total ad spending amounted to $235.6 billion, of which $130.2 billion was spent on local ad buys.