Local Online Ad Revenues to Hit $42.5 Billion

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The rise of social media, mobile commerce and the daily deals platform are driving significant growth in online local advertising, reports BIA/Kelsey’s U.S. Local Media Annual Forecast.

Online ad revenues are estimated to reach $42.5 billion by 2015, nearly twice the $21.7 billion reported in 2010. That increase represents a compound annual growth rate of 14.4 percent.

As local advertisers increasingly rely on the Web and mobile devices to reach consumers, BIA/Kelsey predicts that digital media will represent 23.6 percent of all local ad spending by 2015. Local advertising is defined in the report as local spending by small and medium-sized businesses and national and regional advertisers making local buys.

Key drivers of local online ad spending indicated in the forecast include the following:

•    The increased number of smartphones and tablets
•    Continued significant newspaper revenue erosion
•    The rapid growth of new formats such as social and mobile
•    Consumer spending on daily deals offers will grow to $3.9 billion by 2015

This year’s forecast presents a comprehensive view of the local media landscape, consisting of 12 key segments: newspapers, direct mail, television, radio, print Yellow Pages, out of home (non-digital), cable television, magazines, online/interactive, mobile, Internet Yellow Pages and other interactive revenues generated by traditional media players.

Overall, local ad spending is expected to reach $153.5 billion in 2015, up from $136.3 billion in 2010 and representing a 2.1 percent growth rate.

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