Local Ad Market Shrinkage Predicted

(Feb. 26, 2009) CHANTILLY,VA.: Local ad revenues are poised to slide over the next four years, BIA Services predicts. The forecast for local spending the United States is that revenues will dip to $144.4 billion in 2013, down from $155.3 billion at the end of ’08, a negative compound annual growth rate of 1.4 percent.

Among media types, only interactive is expected to grow. BIA projects more than 22 percent of local ad revenues will be spent on interactive platforms in 2013, compared to 9 percent last year. (Interactive in this case comprises mobile, Internet Yellow Pages, local search, online verticals and classifieds, voice search, e-mail marketing and other interactive revenues generated by traditional media players. BIA earlier this week a projection that total mobile ad revenues would hit $3.1 billion in four years, up from $160 million last year.)

In terms of dollars, interactive is expected to rake in more than $32 billion of the local ad pie in 2013 compared to $14 billion last year.

All other local media platforms “will experience marginal to rapid declines in the next 18 to 36 months,” BIA said. “A small number of traditional media will rebound with a revived economy beginning in 2011, though most traditional media will continue to decline, albeit at a slower pace.”

Local ad spending on TV, radio, newspapers, direct mail, print Yellow Pages and magazines will decrease from $141.3 billion last year to $112.4 billion in 2013, BIA projects.

“The share shift we expect could actually be more pronounced if the major traditional media are not able to integrate new interactive products into their bundle,” said Neal Polachek, CEO of BIA’s Kelsey Group, which collaborated on the forecast. “Successful integration will require considerable attention to business models, product innovation and sales channel evolution.”