bia/kelsey's u.s. local advertising forecast for 2016

Guiding Media. Inspiring Innovation. Leading Local.

BIA/Kelsey's U.S. Local Advertising Forecast for 2016

Key Findings

November 11, 2015

Mark R. Fratrik Ph.D. Sr. VP, Chief Economist,

BIA/Kelsey

Richard V. Ducey Ph.D. Managing Director

BIA/Kelsey

Michael Boland Chief Analyst, VP Content,

BIA/Kelsey

2 © 2015 BIA/Kelsey. All Rights Reserved. | 2 © 2015 BIA/Kelsey. All Rights Reserved. |

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2 © 2015 BIA/Kelsey. All Rights Reserved. |


Advertisers of all types want to reach local audiences.

$146.6 billion will be invested in media platforms by advertisers targeting local audiences in 2016.

Where is the spend now and where is it headed?


BIA/Kelsey’s U.S. Local Advertising Forecast 2016 Power Brew: Mobile, Social, Video

Location Targeted Mobile Ad Spending

Social Advertising Spending

Local Video Display Spending

What does this all mean?

More on the forecast at BIA/Kelsey’s NEXT

Let’s Discuss!

Mark R. Fratrik Ph.D. SVP, Chief Economist

BIA/Kelsey

Richard V. Ducey Ph.D. Managing Director

BIA/Kelsey

Michael Boland VP, Content , Chief Analyst

BIA/Kelsey

http://www.biakelsey.com/Company/Industry-Analysts/#Ducey

http://www.biakelsey.com/Company/Industry-Analysts/#Fratrik


BIA/Kelsey Snapshot

Strategic & Advisory Services National and Local Market Ad Forecasts

Competitive Intelligence

Proprietary Reports Covering Mobile, Search, Social, Video

Analyst Access

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Investment Banking Services

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Strategic Operations

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Conferences BIA/Kelsey Analyst-Curated Programs

Executive-Level Networking

Cutting Edge, Proprietary Research

We are a leading consultancy focused on local. We use our data, expertise and industry relationships – built up in over 30+ years of operations – to help our clients succeed.


National Forecast

U.S. LOCAL ADVERTISING FORECAST 2016 National Overview (Total U.S. Spending In Local Markets)

Individual Media Breakouts

Five-year forecast

Local ad market (2016 - 2020)

Comprehensive and authoritative view of “local” advertising

Market Forecasts

MARKET AD VIEW 1 market 12 media

12 verticals

VERTICAL AD VIEW 1 market 1 vertical 12 media

MEDIA AD VIEW PLUS 1 market 12 media

94 verticals

BIA/Kelsey’s forecasting suite provides the big picture on local.


Forecasting Objectives

Why we do a forecast: Continuously monitor the local marketplace and twice annually

we publish a forecast that offers a five-year national overview of total U.S. spending in local markets and market-based advertising revenue estimates for 12 media.

Present an overall assessment of the local market.

Provide a 360-degree view of the market for local advertising —defined as some form of targeted messaging to specific geographic markets — spent by national, regional and SMB advertisers.

Offer an independent, objective and credible five-year forecast of the market situation.

Give clients a view into the key drivers and assumptions behind the top-line forecasts.


Forecasting Methodology

BIA/Kelsey gathers as much proprietary and secondary information as available by segment.

We then generate preliminary forecasts by segment and discuss them with leaders in our key media — online, mobile, Yellow Pages, TV, radio, etc.

Our process includes using third-party and public company reports to adjust and fine-tune forecasts.

We tie a bottom-up approach with a top-down approach.

Our forecast utilizes long-standing industry expertise and knowledge to adjust drivers and key assumptions.


About Our U.S. Local Advertising Forecast

BIA/Kelsey’s U.S. Local Advertising Forecast offers a comprehensive and authoritative view of the local landscape.

It delivers an objective and credible five-year market outlook.

It includes a national overview of total U.S. spending in local markets and market-based advertising revenue estimates for twelve media:

1. Direct Mail 2. Directories 3. Local Video 4. Local Over-the-Air Television 5. Local Cable Television 6. Local Magazines

7. Mobile 8. Newspaper 9. Online 10. Out-of-Home/OOH Video 11. Radio (Over-the-air, online) 12. Social


“Local” Defined

BIA/Kelsey defines local advertising as:

All advertising platforms that provide access to local audiences for national, regional and local marketers.


http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRxqFQoTCIa0g_3WiMkCFUGjiAodq-MOtg&url=http://www.hercampus.com/high-school/ask-collegiette/ask-collegiette-should-i-go-school-state-or-out-state&psig=AFQjCNHYFUCDKSG8iYGfQaihPM4sAou2nA&ust=1447341926522756


Total U.S. Spending in Local Markets National & Individual Media Overview


Newspapers Print 9.8%

Newspapers Online 2.6%

Direct Mail 25.6%

TV O-T-A 14.5%

TV Online 0.7%

Radio O-T-A 10.0%

Radio Online* 0.8%

Print Yellow Pages 1.7%

Internet YP 1.6%

OOH 5.6%

Cable 5.1%

Magazine 1.0%

Magazine Online 0.3%

Online / Interactive 11.3%

Email 1.6%

Mobile 7.7%

2016 U.S. Local Advertising Revenues — $146.6 Billion

Local Ad Market 2016

Source: BIA/Kelsey, October 2015 *Note: Radio online revenues include online revenue from terrestrial and online streaming services.


$103.3 $104.0 $102.0 $102.9 $101.2 $102.8

$38.0 $42.6 $47.8 $53.5 $59.3 $66.0

$141.3 $146.6 $149.7 $156.4 $160.4

$168.9

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

2015 2016 2017 2018 2019 2020

Traditional Online/Digital

US$

Bill

ions

Note: Numbers are rounded.

2015-2020

CAGRs:

Total CAGR 3.6%

Online/Digital CAGR 11.7%

Traditional Media

CAGR -0.1%

US$

Bill

ions


Steady Spend Shift into Digital Media

Source: BIA/Kelsey, October 2015


Mobile


In addition to interviews and company reports, BIA/Kelsey’s mobile forecast is based on:

Mobile usage trends

Evolving mobile content and ad formats

Advertiser adoption patterns

Ad performance measurements (e.g., clickthrough and cost-per-click rates)

This top-down forecasting methodology is then vetted against a bottom-up approach. The latter applies revenues for top players in each mobile advertising segment (e.g., Facebook, Google and ad networks).

For location-targeted ad revenues, measurement criteria include geographic ad placement, location-specific copy and calls to action (e.g., call local store).

Revenues from advertising that appears on tablets are not included in BIA/Kelsey’s classification of mobile.*

Mobile-Specific Forecast Methodology

*Rationale for BIA/Kelsey’s separation of smartphone and tablet ad revenues is explained here.

http://blog.biakelsey.com/index.php/2014/06/25/are-tablets-mobile-devices-for-media-and-advertising-its-a-resounding-no/


It includes large national advertisers and SMBs.

Location-specific ad copy or calls to action (e.g., call local store) will classify a given ad as location targeted.

What is Location Targeted Mobile Advertising? Location-targeted mobile advertising is defined as… Mobile advertising that is targeted based on a user’s location, or including proximity-relevant content to trigger local offline conversions.



$8.5

$11.3

$0

$2

$4

$6

$8

$10

$12

2015 2016

US$

Bill

ions


Location-Targeted Mobile Ad Spend



$14.2 $18.1

$8.5

$11.3

$0

$5

$10

$15

$20

$25

$30

$35

2015 2016

Non-location Targeted Location Targeted

US$

Bill

ions


Location-Targeted vs. Non-Location Targeted Ad Spend in Mobile

39%

37%



Local Share of Mobile Ad Spend by Format

Traditional Display 18.6%

Search 52.1%

SMS 1.2%

Video 5.8%

Audio 1.9%

Native Social 18.5%

2016



Social Media


Social Media Advertising Definition

Social media advertising is defined as money spent on advertising formats across social networks.

Social advertising is included in BIA/Kelsey’s display revenue forecast, which falls within the online/interactive advertising category.

BIA/Kelsey’s definition of social advertising does not include revenues derived from the following:

Virtual currency

Social marketing/measurement platforms and services

Social commerce


U.S. Social Local vs. National Ad Spend

$6.9

$9.0

$2.4

$3.3 $9.3

$12.3

$0

$2

$4

$6

$8

$10

$12

$14

2015 2016

National Local

US$

Bill

ions




Social Media Advertising by Company

*Other includes ad revenue from all other U.S. social networks (e.g., Pinterest, Tumblr and Foursquare).

Facebook, 76.8%

Twitter, 15.9% LinkedIn, 4.0%

Other*, 3.3%

2016



Local Video


This estimate involves combining the advertising revenues from several media:

Local Television – all its core over-the-air advertising revenues (excludes digital revenues and retransmission consent fees).

Local Cable – all its local cable systems’ advertising revenues.

Out-of-Home – digital cinema advertising revenues and advertising revenues from out-of-home video delivery (e.g., taxi cab video).

Online – portion of local online revenues that are generated by video advertising by pure-play online companies and online sites of other local media (newspapers, television, radio and directories).

Mobile – revenue generated from selling advertising related to mobile video services.

Definitions


Local Video Advertising Trends

Local television stations continue to dominate the local video marketplace.

Local cable systems also continue to make strong inroads in political advertising.

Online video has seen some substantial growth in recent years.

Out-of-home video continues to grow though at a slower rate.

Mobile video (CAGR +29.1 percent) is expected to see rapid growth.

BIA/Kelsey U.S. Local Advertising Forecast 2016


$20.2 $22.3

$6.8 $7.5 $0.7 $0.9 $1.4 $1.5 $0.4 $0.7

$0

$5

$10

$15

$20

$25

$30

$35

$40

2015 2016

Local Television Local Cable Online Video OOH - Video Mobile Video

US$

Bill

ions

Local Video Advertising Revenues


28 © 2015 BIA/Kelsey. All Rights Reserved. | Source: BIA/Kelsey, October 2015

Local Television 67.6%

Local Cable 22.9%

Online Video 2.9% OOH - Video

4.6%

Mobile Video 2.0%

Local Video Advertising Revenues Distribution Across Media

2016


Online


$7.8

$8.2

$7.5

$7.6

$7.7

$7.8

$7.9

$8.0

$8.1

$8.2

$8.3

2015 2016

US$

Bill

ions


Local Search



Recap of Top Findings

Total local advertising revenues in the U.S. will reach $146.6 billion in 2016, up from $141.3 billion this year.

Online/digital revenues will grow to $42.6 billion in 2016, 29.1 percent of total local media revenues, up from $38 billion in 2015.

For 2016, we expect total local ad revenues to nudge upward, resulting from a slightly stronger U.S. economy and a substantial amount of political advertising.

Mobile, social and video—what BIA/Kelsey refers to as the “power brew” for local advertisers—are among the categories that are fueling growth in the local online/digital segment.


Conclusions

The overall media marketplace is an ever changing landscape with new options growing faster than ever imagined (i.e., mobile, social, online video).

The future of location-targeted mobile marketing will involve less static banners; more native and offline-oriented calls-to-action (call, message, find, schedule, or transact with local businesses).

Traditional media still very relevant in overall advertising mixes.

All participants (traditional and already established online/digital companies) need to be attentive and capable of adapting to new options being introduced every day.

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Our ad forecast delivers a comprehensive and reliable view of the local advertising landscape and provide five-year market outlooks of U.S. spending.

For a complete understanding of entire local advertising marketplace, purchase our U.S. Local Advertising Forecast 2016.

Details About the U.S. Advertising Forecast

DETAILS: www.biakelsey.com/USAdvertisingForecast

Understand the market outlook now and in five years

Gain insights around the key drivers and assumptions behind top-line numbers

Drill down into specific media to track activity and opportunity

Access critical analysis around today's most important topics

HOW COMPANIES USE OUR FORECAST:

http://www.biakelsey.com/USAdvertisingForecast

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Hear directly from BIA/Kelsey analysts and over 45 executive speakers about the companies, trends and technologies that will have the greatest impact on what's NEXT in local advertising.

Save $200 on registration with code ADFORECAST.

www.biakelsey.com/next

Attend BIA/Kelsey NEXT to get a deep understanding of what our 2016 ad forecast means for your business.

http://www.biakelsey.com/next


Q&A

Questions & Comments:

Guiding Media. Inspiring Innovation. Leading Local.

© 2015 BIA/Kelsey. All Rights Reserved. This published material is for internal client use only. It may not be duplicated or distributed in any manner not permitted by contract. Any unauthorized distribution could result in termination of the client relationship, fines and other civil or criminal penalties under federal law. BIA/Kelsey disclaims all warranties regarding the accuracy of the

information herein and similarly disclaims any liability for direct, indirect or consequential damages that may result from the use or interpretation of this information.

Mark R. Fratrik SVP and Chief Economist [email protected]

(703) 802-2982

Michael Boland Chief Analyst, VP Content [email protected]

(415) 508-8462

mailto:[email protected]

mailto:[email protected]

bia/kelsey's u.s. local advertising forecast for 2016

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