BIA/Kelsey: Annual ad revenue forecast downgraded

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The overall local media market will reach $149.4 billion by 2015 at an annual growth rate of 1.7%, according to a forecast from advisory firm BIA/Kelsey. Total local advertising revenues for 2011 will total $135.9 billion, a slight decrease compared with the $136.2 billion the firm forecasted back in March.

U.S. local online advertising revenues will rise to $23.3 billion in 2011, compared with $22.3 billion predicted in March. BIA/Kelsey expects this figure to represent 17.2% of total local advertising revenues in 2011, an increase from the 16.4% forecasted in March. By 2015, that share will increase to 25.4%, according to the report.

“I was surprised that digital saw an increase,” said Mark Fratrik, VP and chief economist at BIA/Kelsey. “I thought it would hold steady, especially in the midst of an economic slowdown.”

Yellow Pages and newspapers received the largest downward revisions. Yellow Pages revenues will reach $9 billion in 2011 and newspaper revenue is predicted to reach $23.7 billion, with both figures representing $600 million decreases compared with the March forecast.

In the next five years, Yellow Pages revenue will decrease from 7.7% of total market share to 5% while newspaper revenue will decrease from 19% to 12.9% of total market share.

“The downturn makes advertisers fearful the economy won't pick up,” said Fratrik. “As a result, they are not very aggressively spending. When they look around, they see the decrease in circulation and the decrease in the number of pages.”

“In terms of Yellow Pages, online search is so much quicker and more attractive to people,” he added.

Fratrik said he expects digital to continue to increase its share of revenue while print continues to lose share.

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