Local online advertising will hit about $14.9 billion next year, which is 5% higher than what we're expecting for 2009. We were a bit surprised at the double-digit growth this year, but we are fully expecting much slower growth in the years ahead - certainly a flattening for local online by 2013. It can't grow forever.
Williamsburg, Va. (PRWEB) October 9, 2009
While overall interactive advertising seems to be contracting, smaller local advertisers continue to increase their spending on online media, a trend that should continue into 2010, according to a report released today by local-media research firm Borrell Associates Inc.
Borrell's report, "2010 Outlook: Local Interactive Advertising," points to a handful of companies driving the growth. At the top of the list is Yodle, which is on a path to triple its revenues, to about $75 million this year. Others at the top include Yellbook.com, which on a path to nearly double its revenues to nearly $400 million, and Local.com, growing 34%, to about $50 million. Meanwhile, the report lists a handful of broadcast and print companies such as Hearst, Belo, Scripps, New York Times, Gannett and others who have seen their local online slip by double-digit percentages this year. Double-digit declines aren't isolated to legacy media companies, however. The report says that several pure-play Internet companies have also seen big declines, including Marchex, Monster.com, CitySearch, LookSmart and LiveDeal.
"It's definitely a year when we see growth only for those operations that have fine-tuned their products and sales strategies to the exact needs of the local marketplace," said Peter Conti Jr., executive vice president of Borrell.
Overall, the report projects that local online advertising will grow about 11% this year, to $14.4 billion, and will see slower growth in 2010. In fact, Borrell expects the five-year Compound Annual Growth Rate (CAGR) for local online advertising in the U.S. to be 2.9%, compared with 46.5% growth for the last five years.
"We're not expecting growth to get out of the single digits next year," said Kip Cassino, vice president of research for Borrell. "Local online advertising will hit about $14.9 billion next year, which is 5% higher than what we're expecting for 2009. We were a bit surprised at the double-digit growth this year, but we are fully expecting much slower growth in the years ahead - certainly a flattening for local online by 2013. It can't grow forever."
Included in this year's report is a look at interactive-sales account executive compensation. The report revealed that most legacy media companies aren't rushing to embrace the idea of separate online sales forces, though all the evidence suggests that separate sales forces outperform "convergent" print or broadcast sales efforts. Only 13% of 385 sales managers surveyed by Borrell have separate sales forces.
About Borrell Associates:
Borrell Associates is the leading provider of local advertising research, data and strategic analysis. The company has offices in Williamsburg, Va., and Seattle, Wash., and provides detailed market advertising reports for hundreds of local media companies, including Local Online Ad Spending, Local Ad $pending Report (LA$R®) and customized reports for any U.S., Canadian or U.K. market. For more information, visit Borrell Associates.