To get a clearer view of the future of local ad spend, advisory firm BIA/Kelsey recently compiled its U.S. Local Advertising Forecast 2018.
In the forecast, they predicted that local ad spend will hit $152.2 billion in 2018, up from $143.8 billion in 2017. That’s an overall growth rate of 5.2 percent. Given that 85 percent of all consumer engagement takes place on local pages, this isn’t exactly surprising.
Mark Fratrik, chief economist and senior vice president at BIA/Kelsey, thinks that this growth rate can be at least partially attributed to the strong economy.
An impressive 64.7 percent of that money will go towards traditional advertising channels, like TV and newspaper, with the remaining 35.3 percent going towards digital ad channels. eMarketer created a handy graph to illustrate that division:
Diving deeper, let’s look at the top three types of media used in local advertising.
- Direct mail: First place goes to direct mail, which boasts a 25.4 percent share, totaling $38.5 billion.
- Local TV: Coming in second place is local TV, with a 13.8 percent share totaling $20.8 billion.
- Mobile: Last but not least is mobile, which has a 12.6 percent share totaling $19 billion (back in July, we compared two types of mobile advertising if you want to learn more).
It’s also worth noting that the forecast predicts that social media ad revenues from mobile will represent 80 percent of total social ad spending by 2022 (it currently represents 71 percent).
Fratrik says that “social channels such as Snapchat and Instagram have evolved their mobile native ad models to include new targeting and reporting features.” So, “as mobile and social local channels continue to deliver high performance results for advertisers, advertising dollars will flow to these areas. Indeed, pushed by increased consumer use, agencies will budget more of their spending into locally activated mobile products and services.”
At SearchForce, we’ve looked into the subject of Snapchat and Instagram ads multiple times. Last year, we explored how advertisers can use Snapchat and Instagram more effectively and explained how brands can boost engagement with Instagram influencers.
The Importance of Location
A vitally important aspect of local digital advertising is location-based advertising. This type of advertising allows businesses to target customers who are are physically located in a certain geographic area.
For example, advertisers could send ads to customers in a certain neighborhood at just the right time, or, businesses might send text messages or push notifications to customers who enter a certain store or attend a certain event.
Another BIA/Kelsey report found that location-targeted mobile ad spend will grow to a whopping $32.4 billion by 2021. That’s nearly half of all mobile ad spend, with both location-targeted and non-location targeted mobile ad spend expected to reach $72 billion in 2021.
Perhaps most importantly, 80 percent of consumers prefer location-targeted ads, according to a report from Think with Google.
The Future of Local Advertising
So, we know that:
- Local ad spend will increase to $152.2 billion in 2018.
- Traditional channels will take up the majority of that spend.
- The top three types of media are direct mail, local TV and mobile.
- Location-targeted mobile ad spend will reach $32.4 billion in 2021.
But, in order to make the most of local and location-based advertising in 2018, it’s important that advertisers look back on what we’ve learned about it in 2017.
Here at SearchForce, we’ve talked about local and location-based advertising a couple of times.
Back in November, we explained how advertisers can turn location data into location intelligence.
In August, we explored how advertisers can use location data to better understand customers.
Going forward, smart advertisers will recognize that local advertising is only growing in popularity, not just among other advertisers but among consumers as well.