Local Online Ad Revenue Poised to Advance this Year

By: Jennifer Saba Remarkably, there's still one area of growth to be found in this year. Local online advertising revenue is projected to increase 12% in 2009 to $14.2 billion compared to 2008, according to new outlook report from Borrell Associates.

Though revenue is on the rise, Borrell warns of a drastic slowdown in the years ahead. To compare, during the past five years local online advertising advanced at a compound annual growth rate (CAGR) of more than 46%. For the next five years? Local online ad revenue growth is expected to screech to a CAGR of 2.9%.

In 2010, Borrell forecasts local online ad revenue to increase 5% to $14.9 billion and to peak at $16.4 billion by 2013.

There are several factors for the de-acceleration in growth. The economy is clearly one reason. However, Borrell points to another interesting trend. In Q3, "there were signs that local advertisers were scaling back some online media and 'adjusting the dials' to find the appropriate mix of print, broadcast, outdoor and interactive marketing to drive store traffic," wrote Borrell analysts. In other words, in the preceding years, local advertisers tended to cut print and broadcast budgets in favor of online.

Borrell also analyzed roughly 34 media companies representing 40% of local online advertising revenue in the U.S. and Canada. Many newspaper companies are included on the list that tallies the growth rate of local online ad revenue for 2008 and the first part of 2009. Last year, Yodle.com topped the list with an increase of 700%. Yellowbook.com was up 113%. Local.com grew its local online ad revenue 98%. Torstar increased its local online revenue 36%.

Borrell notes in the report, "Those who were continuing to grow in 2009 were focused on selling search advertising, online directory listings, and streaming video advertising."


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