Local Ad Markets Are Shrinking

NEW YORK The bad news for traditional local advertising markets just keeps coming. A new forecast from BIA and The Kelsey Group calls for local spending to contract through 2013. According to the forecast, only the local interactive segment will grow.

Between 2008 and 2013, local ad spending will decline at a 1.4 percent compound annual rate to $144.4 billion. In contrast, the share of interactive ad spending will more than double from 9 percent in 2008 to 22.2 percent in 2013.

Only a small number of traditional media will begin to rebound in 2011. The rest will rapidly decline in the next 18-36 months.

“The share shift we expect could actually be more pronounced if the major traditional media are not able to integrate new interactive products into their bundle,” said Neal Polachek, CEO of Kelsey, which was recently acquired by BIA.

Combined spending across mobile, local search, online classifieds, voice search, e-mail marketing, online Yellow Pages and other interactive efforts by traditional media companies is expected to grow from $14 billion in 2008 to $32 billion-plus in 2013, a compound annual growth rate of 18 percent.

Traditional media — including newspapers, direct, broadcast, Yellow Pages, out of home, cable TV and magazines — are forecast to decrease from $141.3 billion in 2008 to $112.4 billion in 2013.

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