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Local advertising spend on mobile to reach $1.9B this year: report

Local search

Search dominates mobile budgets

Mobile local advertising spend will reach $1.9 billion in 2013 and is expected to surpass online local advertising spend by 2017, according to a new report from BIA/Kelsey.

The mobile portion of local advertising spend is expected to reach $6.4 billion by 2017 while the online portion will total $6.3 billion, according to the report. The findings show how local advertising is steadily shifting toward digital media, with mobile playing a key role in driving the digital growth.

“Mobile is playing a very big role in local,” said Mark Fratrik, vice president at BIA/Kelsey, Chantilly, VA.

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“The total amount of advertising on local media is increasing from $132.5 billion to $148.8 billion,” he said. “Behind that, traditional media is going down, while online digital is growing at a 12.3 percent compound annual growth rate.

“Mobile is an increasingly important part of a media or advertising plan. You want to reach people in different places and mobile has the ability of geotargeting in a particular area and people are on the move all the time and they are utilizing their smartphones and tablets more and more, so why not get to them where they are very receptive.”

National advertisers
Local advertising is defined as some form of targeted messaging to specific geographic markets.

The report also points to the significant role that national advertisers are playing in driving the growth of local mobile advertising, accounting for 85 percent of the spend. National advertisers’ role in mobile local advertising is much bigger than in any other area of local media.

Overall, local advertising is not expected to grow that much in 2013 with BIA/Kelsey forecasting it will reach 132.7 billion, up from $132.5 billion in 2012. However, the online/digital media component of local advertising – which includes mobile – will grow at a nice pace over the few years while traditional media is expected to shrink.

Traditional media spend shrinks
BIA/Kelsey estimates that the overall local media market will grow at a 2.3 percent compound annual growth rate over the next few years to reach a total of $148.8 billion by 2017.

Growth will be stronger in online/digital advertising revenues, which are expected to grow at a compound annual growth rate of 12.3 percent and reach a total of $41.1 billion by 2017.

During the same period, the spend on traditional local media will shrink 0.3 percent annually for a total of $107.6 billion by 2017.

Between 2012 and 2017, online/digital media's share of total local advertising spend will increase from 17.4 percent to 27.6 percent while traditional media's share will decrease from 82.6 percent to 72.4 percent.

The spend on mobile local advertising will increase to $3.1 billion in 2014, $4.3 billion in 2015, $5.3 billion in 2016 and $6.4 billion in 2017.

“National advertisers make up a very large percentage of the mobile local spend right now,” Mr. Fratrik said. “We estimate it to be around 85 percent of the mobile local advertising spend - that percentage is going to go down but the total amount will increase as more local advertisers go into mobile.

“Local advertisers may be not as far ahead on the adoption curve in employing new technology in their advertising,” he said. “The national advertisers are working with bigger advertising agencies or are a little bit further ahead on employing mobile as part of the advertising mix.”

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York

Associate Editor Chantal Tode covers advertising, messaging, legal/privacy and database/CRM. Reach her at chantal@mobilemarketer.com.

 
Related content: Research, local advertising, mobile advertising, BIA Kelsey, Mark Fratrik, mobile marketing, mobile

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