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LOCAL MEDIA FORECAST AND STRATEGIES
Presented by: Rick DuceyChief Strategist
Jim TaszarekManaging Director
Session Will Cover
1. Impact of recession
2. Impact of Arbitron PPM methodology
3. Conversion ratios
4. Changes in the local media landscape
Commercial Radio Spending
2006
2009
$18.1 B
$13.3 B
-27%
2011 projected increase +3.5%
Source: BIA/Kelsey
DEI Benchmark Stations
FY2008 – FY2010
DECREASES
Total revenue decrease of 7%
Avg. station revenue decreased 5%
Stations in top 50 markets decreased 8%
Stations in markets below top 50 decreased 2%
Source: DEISource: DEI
DEI Benchmark Stations
DEI Benchmark Stations COS
Stations FY 2008 FY 2010
ALL 30% 32%
Top 50 Mkts 30% 34%
Below top 50 30% 29%
Source: DEI
Arbitron PPM Methodology
DEI Benchmark Stations Conversion Ratios
FY 2010 Median 90th Percentile
PPM Peers
39% 78%
Diary Peers
48% 137%
Source: DEI
Executive Summary:
• BIA/Kelsey defines the local media advertising marketplace as those media that provide local audiences to all types of advertisers.
• The local media marketplace recovery was stronger in 2010 than initially expected.• Spending on political advertising was higher.
• National advertisers rebounded robustly and quickly from 2009 levels.
• Automotive returned with a vengeance.
• Without that political advertising ,and because of an uncertain economy (especially 9%+ unemployment), 2011 looks like a year of no overall growth for local media advertising. Second quarter ended badly; third quarter off to a sluggish start.
Executive Summary:
• The overall local media market will grow slowly over the next five years (at a 2.4% CAGR) and by 2015 total will be $153.6 billion.
• Growth in total local media advertising will not keep pace with that of the overall economy.
• Growth in online/interactive/digital will remain strong. The 2010-2015 CAGR for online/interactive/digital advertising revenues will be 14.5%.
• That compares with a 2010-2015 CAGR of -0.6% for traditional advertising revenues.
• By 2015 local online/interactive/digital advertising revenues will be more than $37.9 billion.
Local Media: 5 Year Forecast:
Traditional Media still carries the day in local markets:
Shift to Digital Media continues forward:
Who takes what in 2015?
Newspapers12.9%
Direct Mail26.9%
TV13.3%
Radio11.7%
Print YP4.0%
Internet YP2.4%
OOH6.1%
Cable5.1%
Magazine2.0%
Online / Interactive 10.4%
ERPM*3.3%
Mobile1.8%
Local Ad Spending: 5 Year Forecast
BIA/Kelsey Projections
0
4
8
12
16
20
Over-the-Air Revenues Online Revenues
Total Radio Station Revenues: 2004-2015
State of the Union: Radio
• Marginal increase for radio 2010-2011 of +1.2%
• Digital was up +15% to $479 million but it’s only 3.3% of total revenue.
• Station trading came to $4.2 billion through October
• Overall, stable values but flat growth
• 2012 forecast is +3.5% overall
• 2015 outlook is for 13.4% CAGR
Local Online: U.S. Display Market
• The U.S. display ad market grew 17.1% to $10.2 billion by year-end 2010, and total impression volume skyrocketed 23%, driven by social media.
• According to comScore, in January 2010 social media accounted for 11% of display ads. By the end of 2010, social media served a full 34% of all display ads.
• We estimate massive inventory for social media caused CPMs to drop 13%, or $1.52, to $1.45.
• We forecast the display ad market to hit $16.3 billion by year-end 2015.
• Local display ads grew to $2.1 billion in 2010, accounting for 20% of total inventory.
• We forecast the local display market to reach $3.3 billion by 2015, a CAGR of 10.3%.
• Display will likely outpace search due toonline video and social ad opportunities.
Mobile Local: A Five Year Forecast
Mobile Local Ad Spend: A Few Takeaways • We project U.S. mobile local ad revenues to grow from $404
million in 2010 to $2.83 billion in 2015.
• This represents a 0.3% share of local media ad revenues in 2010, growing to a 1.8% share in 2015.
• Other local media occupying this pie include radio, television, newspapers, Yellow Pages and online/interactive.
• Growth drivers include Smartphone penetration, mobile Web usage and related increases in ad inventory.
• Advertisers will also be drawn to mobile marketing as part of overall market shifts to digital advertising. Traditional media companies with sales forces will speed this shift in the face of falling offline revenues.
Mobile Local Ad Spend: A Few Takeaways • As we’ve seen in the online space over the past decade, self-
serve tools will also democratize the mobile ad buying process.
• Google has already begun to bundle mobile ad placements within its pervasive AdWords search marketing platform.
• Mobile self-serve ads could see greater adoption among SMBs than paid search, due to clearer ROI, tangible conversions and a shorter purchase funnel — all of which correlate to mobile user intent.
The mood of the advertiser?
.
The mood of the advertiser?
As influencers of SMB media buying decisions, media salespeople rated at the bottom of the list.
.
Biggest Influence on Media Decisions
SMB Research 2010
The key theme to emerge from LCM Wave 14 is the overall robustness of SMB behavior vis-à-vis advertising and marketing. Manifestations of this overall energy and expansion include:
• The use of more media, along with a higher level of spending on advertising and promotion.
• An increase in the percentage of SMBs with a permanent online presence and their spending on that presence.
• A much higher proportion of spending on online media.
• A dramatic increase in the utilization of social media.
• Generally, less disparity in the use of online and social media among SMBs in different age brackets, which suggests these media are getting deep traction across SMB age groups.
.
Social Media Use Grows!
SMB usage of various “social media” is already intense. Nearly half of SMBs reported having a Facebook page for their business — even more than use e-mail marketing
.
19%
43%
48%
22%
25%
0% 10% 20% 30% 40% 50% 60%
Blog
Other SocialNetwork
Moving forward? • Radio still a powerful and viable medium, reaching over 90+ of
US Adults weekly.
• Web brands realize power of radio’s promotion strength. Radio helped build web brands.
• 2007 RAIN Study shows power of radio/internet platform combination to drive sales.
• PPM now demonstrating that Public Radio has viable and sizable audiences.
• You, too, can be accountable.
• Radio needs to realize the interactive world is here to stay and embrace it.
• Better, simpler and accountable solutions will win the day.
• You are a part of the world’s first mobile and social medium.
.
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Questions?
