US SOLOMO ( SOCIAL LOCAL MOBILE SPENDS 2016 ONWARDS)

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
Richard V. Ducey Ph.D.
Managing Director
BIA/Kelsey
Michael Boland
Chief Analyst, VP Content,
BIA/Kelsey

2© 2015 BIA/Kelsey. All Rights Reserved. | 2© 2015 BIA/Kelsey. All Rights Reserved. |
America’s Veterans.
Our Gratitude. Our Respect.
2© 2015 BIA/Kelsey. All Rights Reserved. |

Advertisers of all types
want to reach local audiences.
$146.6 billion will be invested in media platforms
by advertisers targeting local audiences in 2016.
Where is the spend now
and where is it headed?

 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
Let’s Discuss!
Mark R. Fratrik Ph.D.
SVP, Chief Economist
BIA/Kelsey
Richard V. Ducey Ph.D.
Managing Director
BIA/Kelsey
Michael Boland
VP, Content , Chief Analyst
BIA/Kelsey

BIA/Kelsey Snapshot
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
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.

National Forecast
U.S. LOCAL ADVERTISING FORECAST 2016
National Overview (Total U.S. Spending In Local Markets)
Individual Media Breakouts
Five-year forecast
Local ad market (2016 - 2020)
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
BIA/Kelsey’s
forecasting suite
provides the big
picture on local.

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.

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.

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

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

TotalU.S.SpendinginLocalMarkets
National & Individual Media Overview

Newspapers Print
9.8%
Newspapers Online
2.6%
Direct Mail
25.6%
TV O-T-A
14.5%
TV Online
0.7%
Radio O-T-A
10.0%
Radio Online*
0.8%
Print Yellow Pages
1.7%
Internet YP
1.6%
OOH
5.6%
Cable
5.1%
Magazine
1.0%
Magazine Online
0.3%
Online / Interactive
11.3%
Email
1.6%
Mobile
7.7%
2016 U.S. Local Advertising Revenues — $146.6 Billion
Local Ad Market 2016
Source: BIA/Kelsey, October 2015
*Note: Radio online revenues include online revenue from terrestrial and online streaming services.

$103.3 $104.0 $102.0 $102.9 $101.2 $102.8
$38.0 $42.6 $47.8 $53.5 $59.3
$66.0
$141.3
$146.6 $149.7
$156.4
$160.4
$168.9
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
2015 2016 2017 2018 2019 2020
Traditional Online/Digital
US$Billions
Note: Numbers are rounded.
2015-2020
CAGRs:
Total
CAGR 3.6%
Online/Digital
CAGR 11.7%
Traditional
Media
CAGR -0.1%
US$Billions
Steady Spend Shift into Digital Media

Mobile

 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.*
Mobile-Specific Forecast Methodology
*Rationale for BIA/Kelsey’s separation of smartphone and tablet ad revenues is explained here.

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.
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.

$8.5
$11.3
$0
$2
$4
$6
$8
$10
$12
2015 2016
US$Billions
Location-Targeted Mobile Ad Spend

$14.2
$18.1
$8.5
$11.3
$0
$5
$10
$15
$20
$25
$30
$35
2015 2016
Non-location Targeted Location Targeted
US$Billions
Location-Targeted vs. Non-Location Targeted Ad Spend in Mobile
39%
37%

Local Share of Mobile Ad Spend by Format
Traditional
Display
18.6%
Search
52.1%
SMS
1.2%
Video
5.8%
Audio
1.9%
Native Social
18.5%
2016

Social Media

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

U.S. Social Local vs. National Ad Spend
$6.9
$9.0
$2.4
$3.3
$9.3
$12.3
$0
$2
$4
$6
$8
$10
$12
$14
2015 2016
National Local
US$Billions

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

Local Video

 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.
Definitions

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 +29.1 percent) is expected to see rapid growth.
BIA/Kelsey U.S. Local Advertising Forecast 2016

$20.2
$22.3
$6.8
$7.5$0.7
$0.9$1.4
$1.5$0.4
$0.7
$0
$5
$10
$15
$20
$25
$30
$35
$40
2015 2016
Local Television Local Cable Online Video OOH - Video Mobile Video
US$Billions
Local Video Advertising Revenues

Local Television
67.6%
Local Cable
22.9%
Online Video
2.9%
OOH - Video
4.6%
Mobile Video
2.0%
Local Video Advertising Revenues Distribution Across Media
2016

Online

$7.8
$8.2
$7.5
$7.6
$7.7
$7.8
$7.9
$8.0
$8.1
$8.2
$8.3
2015 2016
US$Billions
Local Search

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 2015.
 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.

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.

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 2016.
Details About the U.S. Advertising Forecast
DETAILS:
www.biakelsey.com/USAdvertisingForecast
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
HOW COMPANIES USE OUR FORECAST:

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.
www.biakelsey.com/next
Attend BIA/Kelsey NEXT to get a deep understanding
of what our 2016 ad forecast means for your business.

Q&A

Questions & Comments:
Guiding Media. Inspiring Innovation. Leading Local.
© 2015 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.
Mark R. Fratrik
SVP and Chief Economist
mfratrik@biakelsey.com
(703) 802-2982
Michael Boland
Chief Analyst, VP Content
mboland@biakelsey.com
(415) 508-8462

US SOLOMO ( SOCIAL LOCAL MOBILE SPENDS 2016 ONWARDS)

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