I know it sounds like a broken record, but local search ad revenues are expected to continue to climb as we move through the next three or so years. BIA/Kelsey released its latest forecast about local section advertising revenues today, which predicted a growth from $5.1 billion to $8.2 billion by 2015. This works out to a compound annual growth rate (CAGR) of 10 percent.
Matt Booth, SVP and Program Director of their Interactive Local Media section, states that, “Local search ad revenues hit an all-time high last year, driven primarily by better product integration across search engines, especially Google. Revenues will continue to grow as better targeting, increased mobile usage, and improving integration drive up local search activity.” In fact, BIA/Kelsey expects that by 2015, 30% of all search volume will be local in nature.
This isn’t necessarily anything new, nor is the news that ad revenues from local search are expected to continue to increase. Each quarter sees improvement in available hardware (smartphones, tablets, etc.) that make it easier for people to involve technology in their everyday activities and explosive growth in the number and type of apps available on those platforms. Since much of this activity involves real-time interaction, and an increasing percentage of it involves the use of browsers on these platforms, it is understandably more local in nature. Studies show that at least one-third of mobile users are browsing the Internet with their smartphones and tablets.
What is surprising, however, is the anticipated volume of that growth. There will continue to be a lot of interesting twists and turns in the tale of local search and mobile platforms, not the least of which will be how small to mid-sized businesses adapt to advertising on the mobile platform. Many are just beginning to feel comfortable with local advertising on the conventional browser platform — advertising on the mobile browser environment is similar in some ways, but different in many others. Will most leave this arena to the big brands who can afford the huge spend needed to produce mobile ads that render well in all possible platforms and give up the advantage they may have competitively on a local playing field? Can Joe’s Burgers compete with McDonald’s in drawing in the hungry patron walking down the street browsing for a local burger place?