Sluggish US Economy Driving Switch to Local Digital Media Advertising

By November 14, 2011
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Marketing people working for local brands tend nowadays to favour online advertising, as they find it less expensive and more focused.

The market for local online advertising in the United States has benefited from the current crisis, showing substantial growth. This emerges from an annual study carried out by BIA/Kelsey over the period 2010 - 2105. Although the forecast for local advertising revenue for the year remains fairly stable at around $136 billion, the study shows forecast growth in revenue from the online digital advertising market up from $22 to 24 billion, while the more traditional media segments  - yellow pages and paper-based materials in general – are now revising their earnings forecasts sharply downwards.

Advertisers focusing on local online platforms to economise on the budget

“As the economy wavers between meagre growth and the prospect of a second recession dip, local advertisers in the US remain guarded and apprehensive about making spending commitments,” underlines Mark Fratrik, Vice-President and Chief Economist at BIA/Kelsey. Online advertising is now expected to take a higher percentage of the total revenue from the local advertising sector than previously forecast, due to the "generally lower prices of some digital media” and the desire of companies to “shift their advertising budgets to targeted audience opportunities and performance models," he explains.  

Overall local media ad market set for slow growth

Original forecasts for digital media share in local advertising revenues have now been hiked from around 16% to just over 17% of total local advertising revenues for 2011 and from 24.7% to 25.4% for 2015. Meanwhile the local advertising market as a whole is set to grow slowly – by around 2% a year to 2015 – as the forecast downturn in traditional media advertising is offset by an expected increase in revenue from online advertising. Highlights from the study will be presented at BIA/Kelsey’s upcoming Interactive Local Media West conference taking place from 12-14 December in San Francisco.

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