Inside BIA/Kelsey’s New Local Spending Forecast: Q&A with Mark Fratrik, SVP and Chief Economist, BIA/Kelsey

BIA/Kelsey is releasing its new comprehensive forecast on local media spending for the coming year. On the eve of the release, we spoke with BIA/Kelsey SVP and Chief Economist Mark Frantik.

What’s the big picture with spending on local advertising?

It is looking relatively strong. We’re seeing overall spending increasing three percent a year for the next five years. But the growth in advertising, while healthy, is not keeping up with the nominal growth in GDP, which is growing at 4.5 percent to 5 percent. Advertising has become increasingly efficient, and advertisers are also putting their money into other marketing areas, which we call “non advertising,” such as loyalty programs.

Which areas are growing faster than others?

Within local advertising, there are definitely pockets of faster growth. Online/Digital advertising is going up 12 percent a year. Traditional advertising, however, is decreasing by 0.5 percent a year.

Are any traditional media “going off the cliff,” given the fast changes in the industry?

Most traditional media remain very relevant. As mass media, they are great for extending the reach of a message. Most digital media are more about specifically targeting users. National and local advertisers will always want a mix of messages. That said, newspapers are in the most precarious position. We are estimating they’ll see a decrease in print advertising by five percent a year — and it will be even more severe if they limit the days they publish to three days a week, which is the current trend.

What are the big trends in digital spending?

What we are continuing to see is a speedup of digital marketing vehicles especially mobile, and the way they are used. All advertisers, whether larger or small, are taking advantage of digital benefits in big way. While traditional media remains an important part of the picture, generally, several segments have become much more oriented towards digital online.

In the new forecast, which indicators have gained more weight?

We’re monitoring everything on a weekly basis. Right now, we are banking on social ad networks becoming increasingly important. We also keep upping the growth rate of mobile advertising. But mobile starts with such a low base that the percentage of increases are a bit misleading. But by 2019, mobile becomes a BIG player in the local advertising marketplace

Can you point to a specific vertical segment that has moved to online?

One of these is real estate, which previously used newspapers for the vast majority of its spend. Now, real estate is all about vertical Websites, and the Websites of individual Realtors and brokerages.

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