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2008 Outlook: Local Online Advertising
Borrell Associates Inc.
After a decade of testing the Web, local advertisers are making signifi¬cant adjustments to their marketing dials, turning up the volume on online advertising.
We expect a 48 percent 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. A major component of local video advertising will be long-form pieces for home, automotive and health-related categories.
Next year will be a perplexing one for local media companies trying to tackle the Web. Most yellow pages publishers, cable companies, newspapers, radio stations and TV stations are still pinning their hopes on their traditional sales reps being able sell online ad packages. But there is increasing evidence to support the idea that a greater investment in an independent online sales force will be necessary to continue the growth these properties have enjoyed for the past few years.
The growth rates for most local media operators have slipped well below the overall growth rate for local online ad buys – which means these properties are losing market share. Much of that share is being captured by pure-play Internet companies hungry for the growth they see in the local market, although they are seeing benefi¬ts to partnering with local media companies to supplement their own efforts.
Key advertising segments for 2008 will continue to be the “Big 3” classifi¬ed categories of automotive, recruitment and real estate, with online political marketing holding promise for local sites as state and presidential campaigns heat up.
Marketing budgets will accelerate their shift out of traditional advertising formats (both online and online) and into non-ad activities such as promotions and public relations, which are better at delivering the improved targeting and accountability that advertisers are demanding.
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