Local digital ad spend to hit USD37.9bn by 2015

Local digital ad spend is set to increase by almost two-thirds over the next four years, from USD23.3bn this year to top USD37.9% by 2015, according to the latest report from BIA/Kelsey, as consumer uptake of services such as local offers and check-ins continues to climb. Digital ads will represent a growing proportion of overall local ad spend over the next four years, increasing from 14.6% last year to 25.4% in 2015, in a trend being mirrored across the broader ad industry. The growth of social local ads, boosted by uptake among small businesses is expected to continue driving growth in the sector.

The report suggests that the strongest growth in the local ad space is  yet to come, arguing that national and small- to medium-sized brands  have not widely adopted local targeted ads. Analyst Jed Williams suggests efforts from Facebook and other social networks to up engagement with local ads from both a consumer and advertiser perspective with coupons and incentives will drive growth in 2015, “especially as smaller businesses learn how to leverage targeting features to optimise results”.

Click-through rates on Facebook ads increased some 18.5% during Q3, according to stats from TBG Digital, as the social network continues to prove its effectiveness in the social ad market. The firm is expected to generate USD3.8bn through advertising this year alone. Meanwhile, daily deals services such as Groupon are offering increasingly targeted localised ads in a bid to up engagement on their sites.

Social media ad spend by both national and local advertisers will skyrocket nearly 300% from USD2.1bn last year to USD8.3bn by 2015, claims BIA/Kelsey, in line with other forecasts over the growing influence of social on the traditional ad market. National advertisers are, however, expected to continue dominating social advertising spend, accounting for USD3.5bn of a total USD4.6bn spend forecast for 2012.

The findings are supported by reports that more than two-thirds of US marketers are now using social media sites for advertising, with that number set to rise to 85% over the next 12 months as the popularity of sites such as Facebook and Twitter among consumers continues to increase.

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