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Local Online Spend Climbs Despite Setbacks

Online to make up one-quarter of local ad spending by 2014

March 1, 2010

A deeper recession than expected in 2009, along with rapid structural changes to the local ad market, has caused BIA/Kelsey to lower expectations for local advertising spending, pushing the recovery curve out one year further than previously forecast.

Last year, according to the firm’s “Annual US Local Media Forecast,” US local ad spending reached $130.2 billion, or 55.3% of the total. That was lower than the $141.3 billion BIA/Kelsey projected in February 2009 and a significant drop from the $156.3 billion spend on local advertising in 2008.

US Advertising Spending Share, Local vs. National, 2009 (billions and % of total)

BIA/Kelsey reported significant declines in almost every medium studied, and lower than expected growth in the interactive sector.

Total local advertising spending will continue to stagnate through 2011, while 2012 will bring “meaningful recovery.”

US Local Advertising Spending, Traditional vs. Online, 2008-2014 (billions)

Online will continue to get a larger share of the local ad spending pie, increasing from 12% in 2009 to a projected 14% this year. By 2014, BIA/Kelsey expects one-quarter of all local advertising spending to be online.

In January, Barclays Capital also reported 2009 local ad spending down significantly from the year before, by about 22%. Barclays similarly expects a flat local ad market through 2011.

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Check out today’s other article, “Small Biz Doubles Social Media Adoption.”

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