Cable's share of local video ad spending will drop from 22% this year to 18% by 2019, akin to the decline that local broadcast TV channels face as their ad revenue share falls from 64% to 58% during the same period, according to the new "U.S. Local Media Forecast 2015" that research firm BIA/Kelsey unveiled this week. Local online video advertising will attract most of the diverted ad spending, with its share growing from 9.6% this year to 18.7% in 2019, according to the analysis.
Local cable advertising, which BIA/K pegs at $6.9 billion this year, will drop slightly in 2015 and then teeter upwards for a few years, settling at $7.4 billion in 2019. [See chart.]
Throughout the media world, the next few years will see a "steady shift toward digital media," the BIA/K report concludes. Today's ad spending split between "traditional" media (77%) and digital media" (23%) will migrate to a 65%/35% split by decade's end.
"We expect the pace of growth in the overall local advertising marketplace to moderate through 2019, resulting in a 3% compound annual growth rate," said Mark Fratrik, chief economist at BIA/Kelsey. The standout will be the online/digital advertising sector. Fratrik expects revenues in that category to see a 12.2% CAGR through 2019, compared with essentially flat revenues for traditional advertising (-0.5% CAGR) during the same period.
Reflecting current changes in advertising economics, BIA/Kelsey has lowered its overall local ad spending forecast for 2014 (including all media) to $137 billion, down from its original $138 billion forecast. The company expects "a slight increase" to $139.3 billion next year, "reflecting a slightly stronger U.S. economy."
Online/digital will account for more 25.2% of total local media revenues in 2015, BIA/K's study predicts. "Mobile local" and "local social" (including "search") will lead the growth in this sector. BIA/Kelsey foresees:
- Mobile local ad revenues will grow from $4.3 billion in 2014 to $6.6 billion in 2015
- Local social media revenues will grow from $2.5 billion in 2014 to $3.6 billion in 2015.
- Local search revenues will grow from $7.1 billion in 2014 to $7.2 billion in 2015
- Local display revenues will grow from $4.3 billion in 2014 to $4.9 billion in 2015
- Local online video revenues will grow from $2.3 billion in 2014 to $3.0 billion in 2015
BIA/Kelsey released its forecasts during its "Leading in Local" conference in New Orleans this week.