Local online ad spending will reach $15.7 billion in 2011. Or is it $23.3 billion? Recent local online ad forecasts from two of the most reputable local ad research firms, Borrell Associates and BIA/Kelsey, reveal big discrepancies.
Borrell Associates pegs it at $15.7 billion, and Kelsey at $23.3 billion. Why the $7.6 billion difference in the two reports? To put it simply, methodology. Kelsey lumps in expenditures that Borrell doesn’t.
Key distinctions are Kelsey’s inclusion of spending on email management and online reputation management, categories that Borrell does not include in its roundup of local online ad spending. Indeed, some would consider these closer to production or PR related expenditures.
Kelsey also adds in digital out-of-home spending such as ads seen on the digital monitors in the back of taxicabs – and even what it calls “digital cinema” – the local ads played before film previews at movie theaters.
Borrell doesn’t include those digital out-of-home expenditures in its local online ad spending report. Until now, said Kip Cassino, EVP at Borrell, the research firm has included out-of-home data in its reports. “That will change next year. It usually takes us two years or more to research new media choices before we publically delineate them,” he added.
It’s all reflective of the firms’ mission of tracking a shifting target. “It’s a moving definition,” said Mark Fratrik, VP and chief economist at BIA/Kelsey.
“What we try to make estimates of are advertising spending by businesses that are trying to target local audiences, and geo-target,” he continued.
“This is difficult stuff to do,” said Cassino. For him, the differences between the Kelsey approach and the Borrell approach has a lot to do with semantics. “A lot of it is semantic in that their definition of what is local is very different from ours.”
For instance, while Kelsey might include ad spending from a national advertiser geographically targeting a local market, Borrell may not. Borrell, said Cassino, considers local ad dollars to be those “paid for or generated from, and targeted to that same market.”
The online share of all local ad spending reported by both firms, however, is more on par. Borrell’s report, released earlier this month, states that local online ads will account for 19.7 percent in 2012. Kelsey says it will be 18.9 percent of the local ad market next year.
But, in the end, both firms essentially have the same goal; that is to help local media businesses understand the marketplaces in which they operate. “It’s very important for media companies to know their share [of their market] whether they’re offline or online,” said Cassino. Without that information, for instance, a local media firm with 5 percent revenue growth last year may not realize it should have grown more in a local market that grew 10 percent overall.