CHANTILLY, Va. – Total local advertising revenue in the U.S. will reach $151.2 billion in 2018, up from $143.8 billion this year, while traditional media will comprise 64.7 percent of the revenue, says a new report from BIA Kelsey.
BIA Kelsey defines local advertising as all advertising platforms that provide access to local audiences for national, regional, and local marketers.
Key findings include:
- Direct mail preserves its lead position with a 25.4-percent ($38.5 billion) slice of the local advertising pie. High response rates of around three to five percent, and a return on investment comparable to some digital media, combine to make direct mail appealing to advertisers.
- Local television continues as the second choice 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 move into the third position, representing 12.6 percent of local ad spend in 2018. This category will grow to 19.2 percent by 2022. Adoption of mobile local advertising tactics (e.g., geo-fencing, click-to-call, and click-to-map) continues to grow among national advertisers that tend to gravitate toward effective, increasingly available and currently undervalued mobile local ad inventory.
- Native social advertising will see significant increases 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 user activity shifts away from desktops.
Mark Fratrik, chief economist at BIA/Kelsey, said the drivers are a strong economy and the expectation of highly competitive statewide political races next year. “Combine these factors with the continued strength of traditional and online media and the revenue landscape for next year looks robust,” he said.
Fratrik added that as mobile and social local channels continue to deliver high performance results for advertisers, advertising dollars would flow to these areas.
“Indeed, pushed by increased consumer use, agencies will budget more of their spending into locally activated mobile products and services,” he said.