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BIA/Kelsey Forecasts Local Digital Ad Revenue Growth

Which bolsters slower growth overall in local media markets

BIA/Kelsey predicts growth in the digital segment of local media advertising through 2016.

In its new U.S. Local Media Forecast (2011-2016), BIA/Kelsey forecasts, local online/interactive/digital advertising revenues will climb from $21.2 billion in 2011 to $38.5 billion by 2016, representing a compound annual growth rate of 12.7 %. This figure includes mobile.

The growth in the digital segment will offset slower than anticipated growth in total local media advertising revenues, according to the firm.

The U.S. economy remained slow through most of 2011 because of several factors, including concerns about the European economic crisis, continued high unemployment and the housing market’s lack of recovery. These factors led to consumers and businesses “holding back” in their spending. The weaker than expected level of economic activity resulted in a lower level of local advertising revenues, according to BIA/Kelsey.

“In October, we projected the total of the U.S. local media market to be $135.9 billion in 2011,” according to BIA/Kelsey VP and Chief Economist Mark Fratrik. “But we now expect it to be $132.8 billion. Based on the changes in our estimates going forward, we expect the overall local media market will grow a bit more slowly over the next five years.”

BIA/Kelsey forecasts total local media ad revenues to grow from $132.8 billion in 2011 to $151.3 billion in 2016.

The firm expects traditional local media revenues to grow from $111.5 billion in 2011 to $112.7 billion in 2016. Predictably, traditional media revenues experience a bump during election years from political advertising, which appears as a drop in revenues in odd-numbered years. Despite the year-over-year political advertising seesaw effect, traditional media revenues remain remarkably steady throughout the forecast period.