U.S. Local Ad Revs to Rise 5.2% in 2018 to $151.2B

RADIO ONLINE | Wednesday, December 6, 2017 | 3:00am CT

BIA/Kelsey

BIA/Kelsey's U.S. Local Advertising Forecast 2018 projects total local U.S. ad revenue will reach $151.2 billion in 2018, up from $140.9 billion this year, representing a growth rate of 5.2 percent. Traditional media will comprise 64.7 percent of the revenue, with online/digital securing 35.3 percent. In 2017, radio secured $15.5 billion ($1.3 billion online and $14.1 billion OTA) and 2018 is forecast to rise slightly to $15.7 billion and to $16.7 billion in 2022.

"The strong economy and the expectation of highly-competitive statewide political races next year reinforce our outlook that local advertising revenue will show strong growth in 2018, in fact, higher than we've seen for five years," said Mark Fratrik, chief economist and SVP at BIA/Kelsey. "Combine these factors with the continued strength of traditional and online media and the revenue landscape for next year looks robust."

Specifically on radio, Fratrik noted:

• 2017 was a year of basically no growth in radio over-the-air advertising, with future years also only showing small increases of less than 1% annually.
• Increased streaming audio competitors and increased competitors for advertisers has basically kept the over-the-air advertising stagnant, with online efforts by stations continuing to help support a slight overall revenue growth.
• Many radio groups are continuing their efforts in online activities which bolster the overall revenue of these stations, as station operators recognize that future revenue growth must come from these sources.
• Biggest ad increase in 2018 across U.S. will be southeast - 1.1%

Direct mail preserved its lead position with a 25.4 percent ($38.5 billion) slice of the local advertising pie. Local television continues as second media 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. Mobile will move into the third position, representing 12.6 percent of local advertising spend in 2018.

The forecast also projects significant ad spending in native social advertising 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 of the user activity shifts away from desktops.

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