Report: Mobile and Online Video Key to Local Ad Growth

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CHANTILLY, VA.—Local ad revenue is predicted to reach record highs by 2021 in large part due to the growth of local online and mobile video, as well as mobile and social advertising, according to the midyear update of BIA/Kelsey’s “U.S. Local Advertising Forecast 2017.” With an expected 17 percent growth for online and mobile sources, BIA/Kelsey believes that the local ad revenue could reach $174 billion by 2021.

All of this despite the updated report decreasing its advertising estimate for 2017. The report adjusts this year’s potential revenue to $147.9 billion, citing an overall weaker economy in the beginning of 2017 that has led to softness in advertising revenues. However, forecasts for online/digital ad revenues are higher than predicted, with a 2016-2021 Compound Annual Growth Rate of 11.6 percent. Over that same period, traditional ad revenue sources are expected to see a slight decline of 0.6 percent CAGR.

“Although national and local businesses still utilize a mix of digital and traditional advertising platforms, the opportunities afforded by mobile, social and video advertising are incredibly valuable due to their measurability, adoption by consumers and enhancements by technologies such as beacons and data attribution that blend extraordinarily well with today’s mobile consumer,” said Mark Fratrik, chief economist for BIA/Kelsey.

Mobile has already made strides in replacing more traditional ad revenues. The report forecasts the top four media sources contributing to the local media pie for 2017, rounded out by direct mail at $37.1 billion; local TV at $20.9 billion; online/interactive at $18.6 billion; and newspapers at $16 billion. Mobile, at $16 billion, took over the number five spot, edging out local radio, which dropped to number six with a contribution of $15.6 billion.

The “U.S. Local Advertising Forecast” is a five-year forecast that delivers a national overview of total U.S. spending in local markets. To full report is available through BIA/Kelsey.