BIA/Kelsey Forecasts Local Ad Decrease
February 26, 2009 at 12:42 PM (PT)
Traditional media -- including radio, television, newspapers, direct mail, print YELLOW PAGES, cable TV, magazines, and out-of home (non-digital) -- will see local ad spending decrease from $141.3 billion in 2008 to a projected $112.4 billion (-4.5% compound annual growth rate), according to the latest U.S. Local Media Annual Forecast (2008-2013) by BIA ADVISORY SERVICES, LLC and its KELSEY GROUP division. BIA/KELSEY forecasts U.S. local advertising revenues to fall from $155.3 billion in 2008 to $144.4 billion in 2013, representing a -1.4% CAGR. The only area to show growth in the projections is local interactive, from $14 billion in 2008 to $32.1 billion in 2013 (at a CAGR of 18%). Other media is forecast to show marginal to rapid declines in the next 18 to 36 months, with a small number of traditional media rebounding with a revived economy beginning in 2011, but most traditional media continuing to decline at a slower pace.
"By the end of the forecast period, the overall size of the local advertising market will be considerably smaller than it was at the end of 2008," said TOM BUONO, President and CEO of BIA ADVISORY SERVICES. "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."
"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 going forward," said KELSEY GROUP CEO NEAL POLACHEK. "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. Successful integration will require considerable attention to business models, product innovation and sales channel evolution."