The growth in mobile and targeted local digital advertising will eclipse other media formats over the next two years and capture budget from other digital formats such as paid search and untargeted banner ads, according to a newly revised forecast from Borrell Associates.
The research firm revised its earlier local advertising spend forecasts based on trends in U.S. ad spending during the first half of 2014, which shows that growth in online and mobile local advertising budgets continues to defy expectations while the drop-off in newspaper print advertising still has not hit bottom. Targeted advertising, in particular, is booming, with one of every five dollars spent on local advertising expected to be spent on targeted banners by the end of next year.
“Mobile’s role in local advertising is progressing a little quicker than forecast a few years ago, propelled by manufacturer demands through co-op and the growing mobile, social connection,” said Corey Elliott, director of research at Borrell Associates.
“Mobile, and especially mobile/social, can’t be handled in the same way banners were in the past,” he said. “Marketers must know who they need to contact and for what reason.
“Mobile is one-to-one media, not mass media.”
Shifting budgets The revised forecast is based on a review of the $104 billion spent by locally based businesses across 3,000 United States counties.
Key findings include that online advertising, including mobile, will grow 44 percent next year.
However, the spend on paid search will decline 4 percent while the spend on untargeted banner ads will drop 13 percent. These declines will be driven by the growth in targeted ad formats.
While traditional media budgets have been shrinking for some time, Borrell had previously forecast that the declines in newspaper print advertising would end and that expenditures would level out but not grow.
The revised forecast reveals that the situation for newspaper print ads is worse than thought, with budgets now expected to decline 11.1 percent this year and 4.8 percent next year.
Overall ad spending on print and broadcast media is forecast to decline a total of 3 percent next year.
The local advantage Marketers are clearly embracing mobile for targeted local advertising.
For example, Toyota is using a new mobile advertising unit to serve real-time offers to customers who are in a Toyota dealer’s region and in the market for a car (see story).
Renault recently raised awareness of its electric car Zoe and drove traffic to local dealerships via a highly targeted mobile ad campaign that paired location with other relevant data to ensure the right consumers were reached (see story).
“We look at mobile as a subset of online in general,” Mr. Elliott said. “Certainly, more online ads were seen on mobile devices than ever before last year.
“But the major decline was due to aging, shrinking audiences for most legacy media – with broadcast TV and newspapers leading the pack,” he said.
Final Take Chantal Tode is senior editor on Mobile Marketer, New York
Senior Editor Chantal Tode covers advertising, messaging, legal/privacy and database/CRM. Reach her at firstname.lastname@example.org.