Borrell Associates has released a report taking a look at local online advertising.
Borell expects a 48% increase in local online ad spending in 2008, bringing it to 12.6 billion. Driving most of the growth is the popularity of local search and online video advertising. Local search advertising will more than double next year, to 5 billion, while locally placed online video will triple, to almost 1.3 billion.
Key ad segments for 2008 will continue to be the “Big 3” classified categories of automotive, recruitment and real estate, with online political marketing holding promise for local sites as state and presidential campaigns heat up.
The company generating the most local revenue from the Internet—Gannett, with more than 400 million in Internet ad revenues this year–saw its growth slip to 7.5% during the first nine months of 2007 even while the local online market grew at more than five times that rate. Idearc, which has trained its estimated 3,000 yellow pages reps to sell online products to the tune of nearly 300 million this year, has seen its Internet ad revenues increase 26%–well below this year’s market growth rate of 48%.
Convergence, or multi-platform sales, will continue to gain at least some traction for local media companies that are just launching those efforts.
Local broadcasters–radio and TV–have enjoyed 35% to 45% growth in Internet revenues this year, primarily by selling to their on-air advertisers.
Borrell’s 2008 projections contain a strong message from local advertisers. They are becoming less willing to purchase mass advertising on the Internet and are much more inclined to try paid search and video advertising formats. They are forecasting single-digit growth in local banner advertising next year.
Borrell is also expecting very strong growth for the local online video segment in 2008, saying wice as much online video advertising will be placed locally as nationally. This is due to the fact that much of national video is in the form of 15-second “pre-roll” ads, while the majority of local video is longer-form “infomercial”-type advertising, which carries a higher price tag.
Surprisingly, newspaper companies are at the forefront of online video sales. Many are up-selling print classified advertisers to online listings that contain 60-second video ads for jobs or homes for sale.
