Local online ad revenue to reach $42.5B by 2015: BIA/Kelsey

Revenue from local online advertising will nearly double in the next four years, climbing to $42.5 billion by 2015 from $21.7 billion in 2010, according to a forecast from advisory firm BIA/Kelsey. Marketers will earn $24.9 billion in revenue from interactive local marketing this year, according to the report.

Marketers earned a surprisingly high $136.3 billion in local ad revenues in 2010, including $21.7 billion online, said Mark Fratrik, VP at BIA/Kelsey.

“2010 was a little better than we had thought it would be, partially because of the political advertising and the quicker response from national advertisers, particularly in the later part of the year,” he said.

Local interactive advertising revenues will see a compound annual growth rate (CAGR) of 14.4% in the next four years, according to BIA/Kelsey.

The firm also predicted that the share of local advertising revenue earned online will grow in the next four years. From 2010 to 2015, the percentage of revenue earned from online and interactive local marketing will increase 9.5% to 23.6%, according to the firm.

Revenue from overall local advertising will grow at a 2.1% CAGR to $153.5 billion by 2015, up from $136.3 billion earned last year. Marketers will earn $141.1 billion in revenue from local media this year, according to the report.

However, the growth of local online and interactive marketing is also affected by the emergence of new technologies. These include the growing popularity of Groupon, content streaming services like Netflix, and the impact of daily newspapers adding online paywalls, added Fratrik.

“Who would’ve thought that Groupon would be doing so much business?” he said. “That affects marketing and advertising and the amount of money that local businesses will be spending.”

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