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Digital drives local advertising growth

News, 27 October 2016

CHANTILLY, VA: Online and digital local advertising in the US is set to grow more than five times faster than the market overall during 2017, new forecasts have indicated.

In its US Local Advertising Forecast 2017 report, research business BIA/Kelsey defines local advertising as all advertising platforms that provide access to local audiences for national, regional and local marketers.

And it projected total local advertising revenues in the US would increase 2.4% to reach $148.8bn in 2017 (excluding political advertising during a presidential election year, it put growth at 3.9%).

But this headline figure hides rapidly diverging trends in traditional and digital spending.

BIA/Kelsey estimated that spending on online/digital would increase at 13.5%, from $44.2bn in 2016 to $50.2bn in 2017, while print and over-the-air ad revenues would decline 2.4%, from $101.1bn to $98.6bn.

It further noted that as more search activity takes place on mobile devices, mobile is cannibalizing search dollars from desktop. But desktop display is benefiting from improved broadband access, while email continues to be a favourite way for consumers to stay in touch with local businesses.

Mark Fratrik, SVP and chief economist at BIA/Kelsey, highlighted several factors at work across the local ad market, including "an improving US economy, increased spending by national brands in local media channels, extraordinary growth in mobile and social advertising, and the continued expansion and selection of online/digital advertising platforms."

He also predicted that the online/digital local ad share would pass that of print media by 2018, but added that traditional media would continue to be widely used.

"Even though online digital is growing as a share and more and more national and local advertisers are making use of it, advertisers aren't abandoning other platforms including over-the-air broadcasts like television, radio, billboards, taxi cabs and elevators," Fratrik said.

"It's mixes of advertising that national and local companies use to have successful campaigns."

Data sourced from BIA/Kelsey, Advertising Age; additional content by Warc staff