By: E&P Staff Local businesses spent $4.8 billion on Internet advertising last year, a 78% jump over the previous year, according to a study released today by Borrell Associates. The report projects local Web ad spending to continue to increase in 2006 to a projected $5.8 billion. 20 percent of the growth was driven by search engine ads places by local businesses.
The report examines revenue, expense and other financial data for 2,466 local media Web sites in the U.S. and Canada.
The study found that much of the growth in Internet advertising was driven by traditional media companies' ramped up online sales efforts. These efforts, according to the report, helped create a greater demand for online ads as local businesses became "increasingly comfortable with the Web and didn?t want to be left behind by their national competitors."
"As we look back on the growth trends for thousands of local Web sites over the past four years, one thing is strikingly clear in this year?s survey," said an executive summary of the report obtained by E&P. "The big sites are hiring more salespeople and getting bigger -- and shockingly more profitable. In fact, the largest local Web site in most markets will generate more in ad sales this year than the largest-grossing radio station in that market. Revenues are already in the tens of millions of dollars for the major site in most large markets, and they are generating from $3 million to $14 million in cash flow for their parent companies."
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