137 billion. That’s how big the local media market is. Steve Marshall and Matt Booth highlighted findings from “Wave XV” of BIA Kelsey’s Local Commerce Monitor during this morning’s session, “New Directions for Interactive Local Commerce.” Not surprisingly, there is a steady shift toward digital media, around 13 percent between now and 2015.

Speaking first, Matt Booth laid out the smb landscape.

Smb Landscape:

• There are 27 million small businesses in the U.S. with a churn rate of 15 percent. Yellow Pages had the largest preponderance of smb advertisers with 3.5 million in the U.S.; however, that number is on the decline.
• Individual smb spend is low with the use of media becoming increasingly fragmented. Therefore, sales forces have to sell more to retain spend level.
• Cost of an onsite sales force is largely prohibitive, as it is difficult to scale.
• Smb focus is shifting to long-term value, driving strategy and go to market plans.

Steve Marshall rounded out the discussion with data nuggets on smb websites, including cost-effective options for smbs in terms of sales and marketing.

VSplash, a managed digital services provider to smb aggregators, reseaerched a half-million smb websites around the world. Key results from its observations include:

• Only 13 percent of smbs have a local phone number on home page.
• Only 24 percent have an email address on the website.
• 36 percent of websites are only a single page in length.

A key takeaway here is that there is a lot of online activity, but a big gap remains between top-level activity and the robustness of follow-through at a granular level. Finally, Steve outlined the top three cost-effective marketing and sales tips as 1) social/viral marketing, 2) self-serve and 3) connecting early to smbs in the business cycle.

Today we released our latest forecast that projects spending on U.S. mobile advertising. The highlight of this particular release is the subset of advertising that will be location targeted. We also break down formats (display, search, SMS), but here I’ll focus on the local stuff.

First off, the methodologies and definition of location targeted are quite nuanced and the topic of a separate post. To sum it up in general terms, we define local ads as having a geotargeting component meant to reach users in a specific location, or as location specific calls to action.

In general terms, that’s the same definition we apply to all the local media we cover such as radio, television, newspapers, online/interactive and YP. But of course, this is taking different (read: more granular) forms with the location targeting capabilities of the mobile device.

With that said, we see total U.S. mobile ad spending growing from $790 million in 2010 to $4 billion in 2015. But the local portion of that total will grow from $404 million to $2.8 billion. In other words, the local portion of the total will grow from 51 percent to 70 percent by 2015.

I’ve been getting lots of questions about what drives this. It will come down to a combination of three main factors.

1. ‘National-Local’ Spend: Brands and agencies are the largest source of mobile ad spending in the U.S.; they will increasingly evolve campaign objectives, targeting parameters to the capabilities of the hardware. This includes native device capabilities like the accelerometer, touch screen, camera, voice and, most of all, location awareness (i.e., GPS). From that will come more location targeted advertising.

Just as the early days of television ads showed people standing in front of the camera and reading a script (inherited from radio), mobile advertising today mostly inherits traits from the desktop. It should (and will) better evolve into the mobile form factor and the growing prevalence of smartphones. Some mobile brands and mobile ad networks (i.e., iAd, Greystripe) are already sinking their teeth into this, while others still have a ways to go.

This will be a matter of advertiser education and evolution to build mobile campaigns from the ground up for the new form factor. There are also some drawbacks any time you start to segment audiences (i.e., location targeting) because that sacrifices reach, which has always been a major objective for a lot of brand advertising. So it has to be evaluated to see if higher performance and clearer ROI outweigh the almighty reach. It’s a new medium and requires new thinking for not only the way campaigns are built and executed but also how they’re measured and deemed successful (see point 3).

2. ‘Local-Local’ Spend: Mobile advertising will move down market to SMB and mid-market segments, where it currently makes up a very small portion of the overall ad spend. This will be similar to the shift we saw online over the past decade as advertising was “democratized” through tools like AdWords. In mobile it will be driven by a combination of self-serve tools (i.e., AdWords, Foursquare), as well as local sales organizations (i.e., newspapers, Yellow Pages) that increasingly bundle mobile marketing with existing advertising. Unlike advertising by national brands, ALL of this SMB advertising will be categorized as local.

3. Premium Rates: The above two factors will result in growth in the volume of ads that are sold, while smartphone growth and usage will increase inventory. But in parallel, the premiums placed on locally targeted mobile advertising will boost the dollar share shifts shown in the chart above. Those premiums will develop as a result of the higher performance we’re already seeing with location targeted mobile ads (when compared to non-targeted). I talk to lots of mobile ad networks who consistently report higher CTR multiples and other metrics (see slide below). As a side note, and back to point 1, these metrics themselves will evolve toward more CPA based measurements, driven by things like deals and payments (an entirely separate discussion).

Those are the broad strokes but hopefully add some perspective. Our methodology involves complex formulas within each of the main mobile ad formats that examine ad volume, rates, coverage and of course mobile usage (i.e., page views or search volume) as a starting point.

That’s all vetted against a “bottom up” assessment: talking to and adding up the revenues of top mobile ad networks. This all provides a baseline for current spending, which is then taken through the ringer of forecasting usage growth, advertiser demand and factors like those above.

For additional questions or reactions of any kind, please email me at mbolandATbiakelsey.com or comment below. BIA/Kelsey subscribers can log in to get the full report, and anyone else please contact me to find out how to get bits and pieces or learn how to get the whole package.

More to come…

As we near the halfway point of the year, reports from the local radio industry reveal that growth has slowed more than expected. BIA/Kelsey now expects over-the-air local radio revenues to grow only 3.4 percent, down from 5.4 percent growth in 2010.

The good news is that online revenue growth is proving to be very strong for local radio stations. We now forecast that online revenue growth will be more than 15 percent for all of 2011 with double-digit increases for the following four years. These revised estimates are included in BIA/Kelsey’s 2nd edition of the 2011 Investing in Radio Market Report released today.

Several factors are causing the lower than expected revenue growth for local radio stations, with economic and new media having the biggest influence.

Clearly, the overall economy is not growing as fast as everyone had hoped and, in turn, advertisers are being cautious with their media buys. Plus, even with several months of overall employment gains, the overall unemployment rate is still over 9 percent and consumer confidence is still not overly strong. Now, where the local economy has proved to be more vibrant, radio has benefited from increased spending. Markets seeing growth of 6 percent in over-the-air-revenues this year include Houston-Galveston, TX, Pittsburgh, PA, Minneapolis-St. Paul, MN, Tampa-St. Petersburg-Clearwater, FL, and Austin, TX.

Beyond the economy, new media — especially social and mobile media — are becoming more prominent in national and local advertisers’ advertising plans, especially as the technology around these media explodes. The ability to target and segment audiences through these new options are very attractive and effective for advertisers looking to reach consumers in a local market.

All this works together to continue challenging local radio stations to work doubly hard to maintain their positions as a significant part of local advertisers’ media plans. The hope is that the economy will be robust enough to not make that task too difficult.

BIA/Kelsey projects that total U.S. social advertising revenues will surge from $2.1 billion in 2010 to $8.3 billion in 2015, growing at a 31.6 percent compound annual growth rate (CAGR). Driven by Facebook, social networks will command a majority share (51 percent) of all display ad impressions by 2015.

The inaugural social advertising forecast is part of BIA/Kelsey’s U.S. Local Media Annual Forecast. The full release can be read here.

Thanks to the 600+ who registered for yesterday’s webinar on the launch of BIA/Kelsey’s Social Local Media advisory service. And even bigger props for the nearly 50 questions and comments that poured in. Our pledge to you: We will address them ALL in the coming months through our blog and other touch points.

To peak the interest of those who missed the festivities, and to summarize for those who attended, here’s a snapshot of the discussion. We asked a lot of big questions, and then framed the challenges and opportunities surrounding each with data, case examples and “so what?” analysis. Among the headliners:

* “Whether you’re a local business, an agency representing SMBs or a media company, what needs to be on your social radar screen beyond just Facebook and Twitter?” My colleague Andrew Shotland reminded listeners not to forget about Web 1.0 tactics — blogs, reviews/ratings, online forums — that are still effective engagement channels. He cited a stat from Hubspot reinforcing how blog activity can drive SEO.

* Our polling showed lots of interest in building content increased content engagement across social platforms. How do you do that? I identified a few key tactics. First, very simply, the more active you are, generally the more interactive your audience will be. Use social media as a customer-care channel by focusing on immediate, thoughtful, personal service. And finally, empower your audience with useful information and recommendations. Angie’s List uses “how to” content to effectively engage customers … ultimately driving them to their site to search for service providers that address these questions.

* Many marketers state that their No. 1 social media objective is figuring out a sensible way to measure ROI. So, how can it be done? Andrew emphasized that measuring social requires a deliberate plan that “creates pre- and post-analysis” of social media marketing. In other words, businesses can build a timeline that shows social media activities overlaid against key metrics (revenue, foot traffic, etc.) to determine their relationship. There are plenty of tools — free and premium — that can help with both analytics and sentiment analysis.

We also asked you to respond to a couple of live poll questions. We posited that the social local media ecosystem will grow into at least a $20 billion global segment by 2015. Nearly half of respondents agreed that our prediction is about right, while 25 percent think that the opportunity is even larger.

As for which social media topic you would like us to cover next, “developing social media plans and engagement strategies” (50 percent) and “determining tools and techniques for measuring ROI” (41 percent) led the pack, followed by “forecasting spending growth in social local. All three ideas will be leading themes of SLM coverage.

The webinar replay is available here. Thanks again for participating!

My monthly Search Engine Watch column is up. It takes a closer look at our recent forecast and why search is the fastest growing revenue source among mobile ad formats. It has a lot to do with the increasingly vaunted position of the browser as a front door to mobile content (bear with me).

Last month, BIA/Kelsey released its annual mobile forecast. It projects mobile ad revenues in the U.S. to grow from $490 million in 2009 to $2.9 billion in 2014, a compound annual growth rate of 43 percent.

But more interesting than the total revenue pie is the breakdown of formats that drive this growth. SMS and display ads currently lead in revenue but are projected to be eclipsed by the faster moving mobile search ad category over the next five years.

So why is that? There are intricate formulas to devise these projections, unique to the way that each of these formats are bought and sold. Inputs include search volume, ad coverage, page views, CPCs, CPMs, etc.

Aggregate revenue for top mobile ad networks are also used to confirm figures. Along these lines, Google’s announced $2 billion global mobile run rate was affirming, given its estimated 60 percent share of the U.S. mobile ad market (including AdMob).

But looking back over why search ad revenue will accelerate so rapidly, a few interesting theories arise.

Read the rest here.

Today, Mary Meeker gave her annual data dump of key Internet trends at the Web 2.0 Summit in San Francisco. As always it was fairly rich, including lots of mobile usage data as leading indicators for opportunities in content and ad delivery.

One of the more notable slides included global smartphone shipments plotted against PC (both desktop and notebook) shipments. They’re set to intersect sometime in 2012 — yes, a little over a year from now.

This prediction gains credence if you examine the trend lines and consider the fact that smartphones are cheaper and increasingly matching the capabilities of PCs. They’re also tied to the growth and ubiquity of mobile devices generally.

Also notable was the “refresh” of her staple slide that shows iOS device growth compared with other historical tech products during their respective first 20 quarters of growth. This really puts iPhone’s market influence and growth into perspective.

Drilling down further, 42 percent of global Q1 smartphone shipments were a combination of Android and iOS devices. This likewise isn’t a new story but the extent of this market share is eye opening.

More important, it is indicative of where to devote development resources for any media companies in the process of building apps (or Web sites). In terms of “picking a horse,” these platforms are clearly where usage momentum lies.

Lastly, a glimpse of the Japan mobile social networking market was provided as a leading indicator to where mobile social networking could reach in Western markets. Facebook leads this charge with 200 million regular mobile users (out of its total 500 million users).

To connect the dots with previous data points, see our coverage from Meeker’s presentation last year. You can also view her presentation from today on Scrib.d, and a few slides are below.

Millennial Media is out with its monthly SMART report for September. Along with the standard data points of its ad network activity (i.e., platform breakdowns), a few other angles are included. Specifically it reveals interesting nuggets about the types of ad targeting it’s seeing.

Among the ads placed across its network, 44 percent are targeted in some way, while the remaining 56 are positioned for broad (non-targeted) reach. Within the 44 percent slice, 42 percent are geotargeted, meaning that 18.5 percent of overall ads on its network are geotargeted.

The rest of the targeting methods include demographic and behavioral and break down as follows:

These are telling of the incidents of local advertising and line up pretty well with the inputs and assumptions behind our recent mobile local ad forecast (and related broader forecast to be released next month). More interesting will be seeing how these numbers change over time.

Like any data set released by one network, it’s not necessarily representative of the overall market but still very much telling and directionally relevant. We have posts that examine most of the past monthly SMART reports and will continue to keep a close eye on any trends that emerge.

In the local media forecast we just released, U.S. mobile local ad revenues are projected to grow from $213 million in 2009 to $2.02 billion in 2014, a compound annual growth rate of 57 percent.

This is the location targeted portion of overall U.S. mobile ad revenue. This subset will grow with greater smartphone penetration, and advertiser evolution in building location-based campaigns. These will also command premiums due to consumer buying intent and conversion levels.

In terms of subsets, this is also just a slice of the local media forecast released, which includes newspapers, radio, television, newspaper and online/interactive. As the chart below shows, mobile represents a 0.2 percent share of these local media in 2009, growing to 1.4 percent in 2014.

A separate mobile-only forecast, set for release in Q4, will further break down overall spending (including national), as well as subsets like ad formats. Stay tuned.