BIA/Kelsey: Local Ad Market to Grow 5.2% Next Year
After a year of sluggish growth, we’re all looking forward to higher ad sales numbers in 2018. BIA/Kelsey analysts have some good news for us. They’re projecting one of the highest increases in the ad market in the past five years.
The ad market will reach $151.2 billion in 2018. While digital will likely drive some of the growth in the local ad market next year, the top media formats reflect some diversity:
- Direct mail: $38.5 billion (25.4% share of the local market)
- Local TV: $20.8 billion (13.8%)
- Mobile: $19 billion (12.6%)
The driving force behind top-line growth in the local ad market will be politics. It’s true that 2018 will not be a presidential election year, but contests for Congressional seats are expected to be tough. The recent battle in Alabama is an important reminder of the increasing polarization of the electorate. In 2018, the Democrats would like to win enough seats to give them the upper hand in the Senate and the House of Representatives. These contests will translate to significant ad spending.
Direct mail may be old-school, but it also works. Marketers know this. They understand that response rates of 3% and 5% in direct mail are higher than some of the response rates that track to digital formats. We can expect direct mail to hold onto a significant part of the local ad market.
Analysts continue to call mobile an undervalued format. Next year, marketers will invest in native social advertising, especially in mobile. The latest technology allows marketers to easily ‘target and reach local consumers.’ Mark Fratrik, chief economist and SVP at BIA/Kelsey points out “Social channels such as Snapchat and Instagram have evolved their mobile native ad models to include new targeting and reporting features.” At the same time, BIA/Kelsey expects social ad buying for smartphones will grow to include as much as 80% of all mobile ads in 2022. Right now, that number stands at 70%.
Local TV continues its commanding presence. With a 60% share of the local video ad market, reps will be busy selling their space to buyers in the automotive and communications sectors, along with PACs and political parties. Marketers will also be exploring local video ads outside of TV. Online local video will amount to at least $2 billion and mobile local video will surpass $1 billion.
As you prepare your selling strategy for 2018, keep these predictions in mind.