Local media companies are recovering slower than the general economy. But despite the category’s performance, digital ads are gaining spending share.
Last year, growth in digital revenues became an increasing component of an increasingly flat local ad economy. Local media company stock performed worse than the overall market, according toBIA/Kelsey's Local Media Index (LMI), but companies more involved in the digital space benefited most from this shift. To illustrate this polarizing movement, the Yellow Pages’ and newspapers indices dropped by 77.5 percent and 27.8 percent, respectively, bringing down the LMI, while those that rose were: online advertising and search (8.0 percent), diversified media (7.8 percent), broadcast television (6.1 percent) and radio (2.1 percent).
The LMI provides a view on the media industry
The firm predicts improvementwithin the LMI and the general economy this year. Within the LMI especially, political advertising should bolster TV and radio. This could help with the recovery of industries that were still dropping last year. "BIA/Kelsey's Local Media Index is showing the values of local media companies can be more volatile to the perceptions about the future of the economy and local ad spending than the S&P itself" said Mark Fratrik, vice president, BIA/Kelsey.
Digital share of local media ad dollars will increase to 25 percent in 3 years
Company advising firm BIA/Kelsey’s LMI tracks publicly traded local media companies that accounts for a $2.2 trillion market. The LMI gives a directional view on how these (approximately 60) companies in radio, broadcast television, Yellow Pages, online local, and outdoor advertising are performing relative to the overall economy. Advertising opportunities are significantly increasing - according to BIA/Kelsey’s forecast, a quarter of all local media ad dollars spent in 2015 will be in “digital media augmenting traditional media spending.”