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Local Ad Sector Will See ‘Real Share Shift’

Researchers emphasize the trend from traditional (including radio) to interactive segments. What's in your bundle?

We’ve become accustomed to reports showing radio industry revenue down except in the online/non-traditional piece of our business. Well, it may be small comfort, but radio is not alone in that.

Local ad spending in all media will be on the decline for the next five years, says BIA Advisory Services and its Kelsey Group division.

“BIA/Kelsey forecasts U.S. local advertising revenues to decline from $155.3 billion in 2008 to $144.4 billion in 2013, representing a negative 1.4 percent compound annual growth rate,” it stated.

“Only the local interactive segment will show growth throughout the forecast period. All other local media will experience marginal to rapid declines in the next 18 to 36 months. 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.”

BIA’s Tom Buono put it this way in the announcement: “As the shift to online accelerates, and the demand for accountability metrics grows, there is an increased urgency for traditional media companies to develop and embrace new business models that incorporate digital strategies in order to drive business over the next decade.”

The companies also project the interactive share of local ad spending will more than double to 22.2 percent in the same period. They define the interactive segment as encompassing mobile, Internet Yellow Pages, local search, online verticals and classifieds, voice search, e-mail marketing and other interactive revenues generated by traditional media players, and think this will grow from $14 billion last year to $32.1 billion in 2013, while the traditional segment (radio, newspapers, direct mail, television, print Yellow Pages, out of home, cable television and magazines) will decrease from $141.3 billion in 2008 to $112.4 billion.

“Within the local advertising sector, there will be a real share shift, and the players most ready to leverage and adopt interactive models will achieve greater success,” said Neal Polachek, CEO, The Kelsey Group. “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.”