BIA/Kelsey: Local Television Revenue Expected to Exceed $0 Billion in 04

CHANTILLY, VA. BIA/Kelsey forecasts the local television advertising market will grow by nearly eight percent in 2014, after slightly dipping in 2013. According to its first edition of the quarterly Investing In Television Market Report, the firm reports that last year the industry earned $700 million in online revenues and $18.4 billion in over-the-air revenues, an 8.5 percent drop from 2012, which was an exceptional year for political advertising. For 2014, BIA/Kelsey anticipates combined local TV revenues (over-the-air and digital) to reach $20.7 billion.

The chart at left represents BIA/Kelsey's forecast for the television industry broken down by over-the-air and online:

This year there will be a significant uptick in ad revenues driven by political ads in hotly contested states, said Mark Fratrik, senior vice president and chief economist, BIA/Kelsey. Additionally, we're seeing the ability of local stations to maintain their loyal advertiser base, which means they consistently receive recurring ad revenue that boosts their profitability.

The top four business category sources of revenue for local television in 2013, according to BIA/Kelsey's Media Ad View Plus Forecast, were automotive dealers ($3.5 billion), wireless telecommunications ($772 million), hospitals ($652.7 million), and full-service restaurants ($558.3 million). While these are the largest business categories utilizing local television, the number of different types of businesses utilizing local TV stations is wide.

The continued use of local television stations in their advertising mix, even in the face of tremendous competition for both viewers and advertisers, suggests a strength in the local television industry, Fratrik said.

Despite its current position, the television industry is experiencing competition from video media solutions. Over the next five years, for instance, online video will experience a strong annual growth rate of 31.5 percent and out-of-home video will grow 9.2 percent. As a result of these changes, local television's share of local video in 2018 will decrease from 67.5 percent in 2013 to 59.4 percent in 2018, even with the higher total revenues shown above ($22.1 billion in over the air revenues).

To defend against the competition, local stations must become more sophisticated with the services they offer advertisers, said Rick Ducey, managing director of BIA/Kelsey. To get a valuable leg up on the other platforms they compete against, television stations are in the perfect position to deliver full-service digital agency services to local clients. As we work to help our clients build out their online offers, to include local online video options, we are seeing the effort net a valuable payoff.

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