Local Digital Advertising Will Continue To Grow…

Traditional Media Advertising will continue to shrink.

A new report from the Kelsey Group and BIA predicts the overall market for Local Advertising will shrink 1.4% by 2013.

The report shows Traditional Local Media Advertising will contract a total of 4.5% over the next five years, yet Local Digital Advertising will experience compound annual growth of 18.0% through 2013.

Its not surprising to see a prediction for a contraction in money spent on Traditional Media Advertising over the next five years. Spending on traditional local media is forecast to fall from $141.3 billion in 2008 to barely over $112 in 2013.

Nor is it surprising to see continued growth in Local Digital Advertising.

However, it is somewhat surprising to see Total Local Advertising predicted to contract over the next five years even if only by 1.4%.

If the economy sheds as many retailers and small businesses during the present recession as predicted, those factors alone might be enough to account for a flat to slightly smaller advertising spend in both digital and traditional media over the next five years.

US Local Advertising Spending

US Local Advertising Spending

From eMarketer:

The good news is that the local online ad market is growing, and will continue to make up a larger percentage of the local advertising sector. In 2009, nearly 12% of local ad spending will be digital, with dollars focused on Internet yellow pages, local search, e-mail marketing and other online tactics.

In 2013, the digital share will jump to over 22%, and might grow even higher.

“The share shift we expect [between traditional and digital] could actually be more pronounced if the major traditional media are not able to integrate new interactive products into their bundle,” said Neal Polachek of Kelsey.

US Local Advertising Spending Share

US Local Advertising Spending Share

I think the Kelsey / BIA report’s predictions regarding share of advertising spent with digital media vs. traditional media over the time period will ultimately be proved too conservative.

As the economy careens toward its trough, the surviving businesses will more aggressively seek the ability to measure returns on their advertising investment.

Measuring return on advertising investment is a tall order for most traditional media yet native to digital advertising.

This flight to quality will cause Local Digital Media to grow more rapidly than predicted while also accelerating the reduction in money spent on any unmeasurable traditional media advertising.

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