BIA/Kelsey's U.S. Local Advertising Forecast for 2016

Transcription

1 Guiding Media. Inspiring Innovation. Leading Local. BIA/Kelsey's U.S. Local Advertising Forecast for 2016 Key Findings November 11, 2015 Mark R. Fratrik Ph.D. Sr. VP, Chief Economist, BIA/Kelsey Michael Boland Chief Analyst, VP Content, BIA/Kelsey Richard V. Ducey Ph.D. Managing Director BIA/Kelsey

2 Our Gratitude. Our Respect. America s Veterans. 2 2

3 Advertisers of all types want to reach local audiences. $146.6 billion will be invested in media platforms by advertisers targeting local audiences in Where is the spend now and where is it headed? 3

4 Let s Discuss! BIA/Kelsey s U.S. Local Advertising Forecast 2016 Power Brew: Mobile, Social, Video Location Targeted Mobile Ad Spending Social Advertising Spending Local Video Display Spending What does this all mean? More on the forecast at BIA/Kelsey s NEXT Mark R. Fratrik Ph.D. SVP, Chief Economist BIA/Kelsey Michael Boland VP, Content, Chief Analyst BIA/Kelsey Richard V. Ducey Ph.D. Managing Director BIA/Kelsey 4

5 BIA/Kelsey Snapshot We are a leading consultancy focused on local. We use our data, expertise and industry relationships built up in over 30+ years of operations to help our clients succeed. Strategic & Advisory Services National and Local Market Ad Forecasts Competitive Intelligence Proprietary Reports Covering Mobile, Search, Social, Video Analyst Access M&A / Financial Services Due Diligence Investment Banking Services Stock, Spectrum, Product & Company Valuations Fairness & Solvency Opinions Litigation Support & Expert Testimony Sales Consulting Digital Sales Funnel Strategy Strategic Operations Business Introductions Business & Consumer Research Trends, Dynamics, Relationships Conferences BIA/Kelsey Analyst-Curated Programs Executive-Level Networking Cutting Edge, Proprietary Research 5

6 BIA/Kelsey s forecasting suite provides the big picture on local. U.S. LOCAL ADVERTISING FORECAST 2016 National Overview (Total U.S. Spending In Local Markets) National Forecast Individual Media Breakouts Five-year forecast Local ad market ( ) Comprehensive and authoritative view of local advertising Market Forecasts MARKET AD VIEW 1 market 12 media 12 verticals VERTICAL AD VIEW 1 market 1 vertical 12 media MEDIA AD VIEW PLUS 1 market 12 media 94 verticals 6

7 Forecasting Objectives Why we do a forecast: Continuously monitor the local marketplace and twice annually we publish a forecast that offers a five-year national overview of total U.S. spending in local markets and market-based advertising revenue estimates for 12 media. Present an overall assessment of the local market. Provide a 360-degree view of the market for local advertising defined as some form of targeted messaging to specific geographic markets spent by national, regional and SMB advertisers. Offer an independent, objective and credible five-year forecast of the market situation. Give clients a view into the key drivers and assumptions behind the top-line forecasts. 7

8 Forecasting Methodology BIA/Kelsey gathers as much proprietary and secondary information as available by segment. We then generate preliminary forecasts by segment and discuss them with leaders in our key media online, mobile, Yellow Pages, TV, radio, etc. Our process includes using third-party and public company reports to adjust and fine-tune forecasts. We tie a bottom-up approach with a top-down approach. Our forecast utilizes long-standing industry expertise and knowledge to adjust drivers and key assumptions. 8

9 About Our U.S. Local Advertising Forecast BIA/Kelsey s U.S. Local Advertising Forecast offers a comprehensive and authoritative view of the local landscape. It delivers an objective and credible five-year market outlook. It includes a national overview of total U.S. spending in local markets and market-based advertising revenue estimates for twelve media: 1. Direct Mail 2. Directories 3. Local Video 4. Local Over-the-Air Television 5. Local Cable Television 6. Local Magazines 7. Mobile 8. Newspaper 9. Online 10. Out-of-Home/OOH Video 11. Radio (Over-the-air, online) 12. Social 9

10 Local Defined BIA/Kelsey defines local advertising as: All advertising platforms that provide access to local audiences for national, regional and local marketers. 10

11 National & Individual Media Overview Total U.S. Spending in Local Markets 11

12 Local Ad Market U.S. Local Advertising Revenues $146.6 Billion Online / Interactive 11.3% 1.6% Mobile 7.7% Newspapers Print 9.8% Newspapers Online 2.6% Magazine Online 0.3% Cable 5.1% Magazine 1.0% Direct Mail 25.6% OOH 5.6% Internet YP 1.6% Print Yellow Pages 1.7% TV O-T-A 14.5% Radio Online* 0.8% Radio O-T-A 10.0% TV Online 0.7% Source: BIA/Kelsey, October 2015 *Note: Radio online revenues include online revenue from terrestrial and online streaming services. 12

13 Steady Spend Shift into Digital Media Traditional Online/Digital $180 $160 $140 $120 $146.6 $149.7 $141.3 $38.0 $42.6 $47.8 $156.4 $160.4 $53.5 $59.3 $168.9 $ CAGRs: Total CAGR 3.6% US$ Billions $100 $80 Online/Digital CAGR 11.7% $60 $40 $20 $0 $103.3 $104.0 $102.0 $102.9 $101.2 $ Traditional Media CAGR -0.1% Note: Numbers are rounded. Source: BIA/Kelsey, October

14 Mobile 14

15 Mobile-Specific Forecast Methodology In addition to interviews and company reports, BIA/Kelsey s mobile forecast is based on: Mobile usage trends Evolving mobile content and ad formats Advertiser adoption patterns Ad performance measurements (e.g., clickthrough and cost-per-click rates) This top-down forecasting methodology is then vetted against a bottom-up approach. The latter applies revenues for top players in each mobile advertising segment (e.g., Facebook, Google and ad networks). For location-targeted ad revenues, measurement criteria include geographic ad placement, location-specific copy and calls to action (e.g., call local store). Revenues from advertising that appears on tablets are not included in BIA/Kelsey s classification of mobile.* *Rationale for BIA/Kelsey s separation of smartphone and tablet ad revenues is explained here. 15

16 What is Location Targeted Mobile Advertising? Location-targeted mobile advertising is defined as Mobile advertising that is targeted based on a user s location, or including proximity-relevant content to trigger local offline conversions. It includes large national advertisers and SMBs. Location-specific ad copy or calls to action (e.g., call local store) will classify a given ad as location targeted. 16

17 Location-Targeted Mobile Ad Spend $12 $11.3 $10 $8.5 $8 US$ Billions $6 $4 $2 $ Note: Numbers are rounded. Source: BIA/Kelsey, October

18 Location-Targeted vs. Non-Location Targeted Ad Spend in Mobile $35 Non-location Targeted Location Targeted $30 $25 $ % US$ Billions $20 $15 $8.5 37% $10 $5 $14.2 $18.1 $ Note: Numbers are rounded. Source: BIA/Kelsey, October

19 Local Share of Mobile Ad Spend by Format 2016 Audio 1.9% Native Social 18.5% Traditional Display 18.6% Video 5.8% SMS 1.2% Search 52.1% Source: BIA/Kelsey, October

20 Social Media 20

21 Social Media Advertising Definition Social media advertising is defined as money spent on advertising formats across social networks. Social advertising is included in BIA/Kelsey s display revenue forecast, which falls within the online/interactive advertising category. BIA/Kelsey s definition of social advertising does not include revenues derived from the following: Virtual currency Social marketing/measurement platforms and services Social commerce 21

22 U.S. Social Local vs. National Ad Spend National Local $14 $12 $10 $9.3 $12.3 $3.3 US$ Billions $8 $6 $2.4 $4 $2 $6.9 $9.0 $ Note: Numbers are rounded. Source: BIA/Kelsey, October

23 Social Media Advertising by Company 2016 Facebook, 76.8% Other*, 3.3% LinkedIn, 4.0% Twitter, 15.9% *Other includes ad revenue from all other U.S. social networks (e.g., Pinterest, Tumblr and Foursquare). Source: BIA/Kelsey, October

24 Local Video 24

25 Definitions This estimate involves combining the advertising revenues from several media: Local Television all its core over-the-air advertising revenues (excludes digital revenues and retransmission consent fees). Local Cable all its local cable systems advertising revenues. Out-of-Home digital cinema advertising revenues and advertising revenues from out-of-home video delivery (e.g., taxi cab video). Online portion of local online revenues that are generated by video advertising by pure-play online companies and online sites of other local media (newspapers, television, radio and directories). Mobile revenue generated from selling advertising related to mobile video services. 25

26 Local Video Advertising Trends Local television stations continue to dominate the local video marketplace. Local cable systems also continue to make strong inroads in political advertising. Online video has seen some substantial growth in recent years. Out-of-home video continues to grow though at a slower rate. Mobile video (CAGR percent) is expected to see rapid growth. BIA/Kelsey U.S. Local Advertising Forecast

27 Local Video Advertising Revenues $40 Local Television Local Cable Online Video OOH - Video Mobile Video US$ Billions $35 $30 $25 $20 $0.4 $1.4 $0.7 $6.8 $0.7 $1.5 $0.9 $7.5 $15 $10 $20.2 $22.3 $5 $ Source: BIA/Kelsey, October

28 Local Video Advertising Revenues Distribution Across Media Local Television 67.6% 2016 Local Cable 22.9% Mobile Video 2.0% OOH - Video 4.6% Online Video 2.9% Source: BIA/Kelsey, October

29 Online 29

30 Local Search $8.3 $8.2 $8.2 US$ Billions $8.1 $8.0 $7.9 $7.8 $7.7 $7.8 $7.6 $ Note: Numbers are rounded. Source: BIA/Kelsey, October

31 Recap of Top Findings Total local advertising revenues in the U.S. will reach $146.6 billion in 2016, up from $141.3 billion this year. Online/digital revenues will grow to $42.6 billion in 2016, 29.1 percent of total local media revenues, up from $38 billion in For 2016, we expect total local ad revenues to nudge upward, resulting from a slightly stronger U.S. economy and a substantial amount of political advertising. Mobile, social and video what BIA/Kelsey refers to as the power brew for local advertisers are among the categories that are fueling growth in the local online/digital segment. 31

32 Conclusions The overall media marketplace is an ever changing landscape with new options growing faster than ever imagined (i.e., mobile, social, online video). The future of location-targeted mobile marketing will involve less static banners; more native and offline-oriented calls-to-action (call, message, find, schedule, or transact with local businesses). Traditional media still very relevant in overall advertising mixes. All participants (traditional and already established online/digital companies) need to be attentive and capable of adapting to new options being introduced every day. 32

33 Details About the U.S. Advertising Forecast DETAILS: Our ad forecast delivers a comprehensive and reliable view of the local advertising landscape and provide five-year market outlooks of U.S. spending. For a complete understanding of entire local advertising marketplace, purchase our U.S. Local Advertising Forecast HOW COMPANIES USE OUR FORECAST: Understand the market outlook now and in five years Gain insights around the key drivers and assumptions behind top-line numbers Drill down into specific media to track activity and opportunity Access critical analysis around today's most important topics 33

34 Attend BIA/Kelsey NEXT to get a deep understanding of what our 2016 ad forecast means for your business. Hear directly from BIA/Kelsey analysts and over 45 executive speakers about the companies, trends and technologies that will have the greatest impact on what's NEXT in local advertising. Save $200 on registration with code ADFORECAST. 34

35 Q&A 35

36 Guiding Media. Inspiring Innovation. Leading Local. Questions & Comments: Mark R. Fratrik SVP and Chief Economist (703) Michael Boland Chief Analyst, VP Content (415) BIA/Kelsey. All Rights Reserved. This published material is for internal client use only. It may not be duplicated or distributed in any manner not permitted by contract. Any unauthorized distribution could result in termination of the client relationship, fines and other civil or criminal penalties under federal law. BIA/Kelsey disclaims all warranties regarding the accuracy of the information herein and similarly disclaims any liability for direct, indirect or consequential damages that may result from the use or interpretation of this information.