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BIA/Kelsey Forecasts U.S. Mobile Local Ad Revenues to Reach $9.1 Billion in 2017

Mobile search will be the dominant ad format, growing to $5.7B in 2017.

CHANTILLY, Va., April 4, 2013 /PRNewswire/ -- BIA/Kelsey, advisor to companies in the local media industry, forecasts U.S. mobile local advertising revenues to grow from $1.2 billion in 2012 to $9.1 billion in 2017, representing a compound annual growth rate (CAGR) of 49.3 percent. This corresponds to a 0.9 percent share of local media ad revenues in 2012, growing to a 6.1 percent share in 2017, according to the firm's recently released U.S. Local Media Forecast (2012-2017).

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BIA/Kelsey's projected mobile local ad revenues represent a subset of total U.S. mobile ad spending, which the firm forecasts to grow from $3.2 billion in 2012 to $16.8 billion in 2017. This puts locally targeted mobile ads at 38 percent of overall U.S. mobile ad spending in 2012, growing to 54 percent in 2017. Several factors will drive the "localized" share of U.S. mobile ad revenues, including:

  • Large brand advertisers will increasingly adapt their campaign objectives to the capabilities of the mobile device due to effective, abundant, and currently undervalued mobile local ad inventory.
  • Mobile advertising will move down market to the SMB segment through a combination of self-serve tools and local media direct sales channels.
  • Premiums that develop for location-targeted ads will compound ad volume growth.
  • Innovation will increase among ad networks and ad tech providers (i.e., Enhanced Campaigns).

"Though inventory growth currently outpaces advertiser demand, we believe the latter will begin to accelerate," said Michael Boland, senior analyst and director of content, BIA/Kelsey. "This will not only increase overall mobile ad spend, but mobile ad rates such as CPMs and CPCs, which are currently lower than desktop equivalents, due to inventory oversupply."

Mobile Local Media Forecast by Format
This forecast comprises advertising placed in mobile search, display, video and commercial SMS. Search advertising currently holds the largest share, followed by display and SMS. Search's dominant share indexes higher within this localized segment than within the broader of U.S. mobile ad revenue total, due to the high correlation between mobile search and local user intent. There is conversely a lower percentage of localization within the display category, due to the branding (as opposed to direct response) and reach-driven objectives inherent in display campaigns (i.e., in-app ads). The forecast includes a breakdown of mobile local ad spending by format as follows:

  • Display (display advertising applied to app and mobile Web inventory) will grow from $379 million in 2012 to $2.7 billion in 2017
  • Search (text advertising applied to search queries on mobile devices) will grow from $704 million in 2012 to $5.7 billion in 2017
  • SMS (commercial SMS messaging) will grow from $101 million in 2012 to $162 million in 2017
  • Video (rich media ad units distributed within app and mobile web inventory) will grow from $38 million in 2012 to $515 million in 2017

BIA/Kelsey custom advisory service clients can log into the client resource center to download the full mobile media forecast.

About the Annual U.S. Local Media Forecast
BIA/Kelsey defines the local media advertising marketplace as those media that provide local audiences to all types of advertisers. Mobile local advertising is defined as advertising that is targeted based on a user's location.

BIA/Kelsey's Annual U.S. Local Media Forecast (2012-2017) draws from multiple sources. These include proprietary data – company, industry and country information in the public domain – as well as discussions with clients and non-clients about the direction and pace of development in the local media marketplace. The forecast is issued annually each spring and updated in the fall. BIA/Kelsey custom advisory service clients receive a full forecast report. For information on gaining access to the forecast by becoming a BIA/Kelsey client or for details on purchasing the forecast, contact Steve Passwaiter at [email protected] or (703) 818-2425. 

About BIA/Kelsey
BIA/Kelsey advises companies in the local media space through consulting and valuation services, research and forecasts, Custom Advisory Services and conferences. Since 1983 BIA/Kelsey has been a resource to the media, mobile advertising, telecommunications, Yellow Pages and electronic directory markets, as well as to government agencies, law firms and investment companies looking to understand trends and revenue drivers. BIA/Kelsey's annual conferences draw executives from across industries seeking expert guidance on how companies are finding innovative ways to grow. Additional information is available at http://www.biakelsey.com, on the company's Local Media Watch blog, Twitter (http://twitter.com/BIAKelsey) and Facebook (http://www.facebook.com/biakelsey).

SOURCE BIA/Kelsey

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