Two years into the recession, there are still few reasons to be optimistic about the size of the ad market. But one silver lining over the past few months been the local ad market — with many innovations in the space and the rapid adoption of smartphones, local advertising (especially in digital and mobile) looks like a promising way to recalibrate ad revenues going forward.

And according to a new study by BIA/Kelsey, local digital advertising will be a much larger part of the advertising pie by 2014. But hardly enough to be happy about.

According to the consulting firm, by 2014, the local ad market will grow to $144.9 billion. That's at an annual growth rate of 2.2%.

But it's better than other digital markets. BIA predicts BIA/Kelsey predicts that most of digital, including search, display and classifieds, will slow its growth. But local digital advertising, which now occupies about 14% of total local ad spend, will make up 25% by 2014.

Is that enough?

BIA/Kelsey thinks that the economy kickstarted a shift toward digital. But it doesn't seem to be moving as fast as many would like.

Brands have been slow to shift their money into digital because it still isn't growing at a fast enough rate to recover lost traditional ad dollars online. As print and television advertising budgets started to shrink with the economy, online revenues haven't been growing fast enough to stave the losses.

But digital local ads have been growing fast. And they have nowhere to go but up. Online only represented 5.4% of total local ad revenue spend in 2009, while mobile had only 0.1%.

That growth isn't going to come quick. The company does not predict any real recovory of the local ad industry until 2012, when it estimated an increase of 3%, then an increase of 3% in 2013 and 5$ in 2014. 

Neal Polachek, president of BIA/Kelsey, tells ClickZ:

"Many people "are now carrying around the Internet in their pockets"...Every message sent to a smartphone "should have local context and local dimension," and he expects to see many new mobile ad models develop in the next few years. Meanwhile, as devices become more capable of delivering ads of any type, there will be a change in the way ad impact is measured."

It just looks like that impact will be coming slower than many in the industry would like.

Meghan Keane

Published 22 February, 2010 by Meghan Keane

Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.

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