One of the biggest challenges facing forecasters this year has been economic uncertainty. The continued threat of a double dip recession has merchants staying conservative with respect to ad spending. As a result, some analysts have revised their earlier forecasts for the local digital advertising market down slightly but spending overall for 2011 will be higher than it was last year.
BIA/Kelsey analysts say local digital advertising revenue should result in $135.9 billion for media firms this year. This spending level accounts for 17.2% of all local ad revenue. By 2015, local digital ad spending will comprise 25.4% of the local ad market.
Mark Fratrik, vice president and chief economist, BIA/Kelsey, remarks that there has been some pulling back by advertisers, a move that is hitting traditional media. Advertisers know that the digital sector offers lower pricing models and more “targeted audience opportunities and performance models." The firm also expects the traditional newspaper and Yellow Pages formats to experience the steepest cutbacks.
While the local digital ad market will experience strong growth rates, the overall market is expected to increase modestly. Between now and 2015, a compound annual growth rate of 1.7% is likely. At that rate, the total spending should reach $149.5 billion by 2015.[Source: U.S. Local Digital Advertising Revenues. BIAKelsey.com. 7 Nov. 2011. Web 28 Nov. 2011]