Local advertising, defined as advertising platforms that provide access to local audiences for national, regional and local marketers in the U.S., is expected to reach $151.2 billion in 2018, up from $143.8 billion this year and representing growth of 5.2 percent. Traditional media will comprise 64.7 percent of the revenue, with online/digital securing 35.3 percent.
Research and consulting firm BIA/Kelsey’s U.S. Local Advertising Forecast 2018 attributes local advertising’s growth in the year ahead to the mix of a strong economy going into 2018, a competitive political landscape and significant growth in mobile and social media.
“The strong economy and the expectation of highly competitive statewide political races next year reinforce our outlook that local advertising revenue will show strong growth in 2018, in fact, higher than we’ve seen for five years,” says Mark Fratrik, chief economist and SVP at BIA/Kelsey. “Combine these factors with the continued strength of traditional and online media, and the revenue landscape for next year looks robust.”
BIA/Kelsey found that direct mail held the lead position with a 25.4 percent ($38.5 billion) slice of the local advertising pie. It attributes the channel’s appeal to advertisers to high response rates of around three to five percent, and a return on investment comparable to some digital media.
Local television took second place at 13.8 percent ($20.8 billion). It will continue to be the largest player (more than 60 percent) in the local video advertising market. Revenue growth within the total local video advertising segment will come from local mobile video (growing to more than $1 billion) and local online video (increasing to more than $2 billion).
Mobile will hold the third position in 2018, representing 12.6 percent of local advertising spending. This category is forecast to grow to 19.2 percent by 2022. BIA/Kelsey notes that the adoption of mobile local advertising tactics (geo-fencing, click-to-call and click-to-map, etc.) continues to grow among national advertisers that tend to gravitate toward effective, increasingly available and currently undervalued mobile local ad inventory.
The forecast also projects significant ad spending in native social advertising next year due to its ability to target and reach local consumers. Social media ad revenues from mobile (not including tablets) now represent about 71 percent of total social ad spending and will grow to nearly 80 percent by 2022 as more of the user activity shifts away from desktops.
“Social channels such as Snapchat and Instagram have evolved their mobile native ad models to include new targeting and reporting features,“ adds Fratrik. “As mobile and social local channels continue to deliver high performance results for advertisers, advertising dollars will flow to these areas. Indeed, pushed by increased consumer use, agencies will budget more of their spending into locally activated mobile products and services.”
