For media companies dependent on (and getting pummeled by) advertising, a new report says there's a bright spot among the darkness: local online advertising.
Borrell Associates, a researcher focusing on local media, says online local advertising will increase about 11 percent this year, to $14.4 billion, and by about five percent next year, to $14.9 billion. The reason for this year's jump, Borrell says, is the flexibility of such sites as Local.com and Yodle to fine-tune their sales techniques to local markets.
If Borrell's projections hold true, local online advertising will outpace online ad sales as a whole. A report from PricewaterhouseCoopers and the Internet Advertising Bureau projects that U.S. Internet ad revenue slipped 5.3 percent for the first six months of 2009 over last year. 2009, in fact, is on track to show the first decline in media revenue since 1981, when Advertising Age began tracking sales of the top 100 media companies.
Local online ad gains will far surpass the projected rise of less than 1 percent of ad sales for magazines, TV, and other media, according to media agency Carat. Still, the rate of online local advertising is slowing considerably from years past. Borrell projects the five-year compound annual growth rate for the sector to be 2.9 percent, compared with a sizzling 46.5 percent seen during the past five years. Several big Internet companies have seen their ad sales decline: Monster.com (MWW), CitySearch and LookSmart. And big TV and newspaper companies like New York Times Co. (NYT) and Gannett (GCI) have seen their local online sales slip this year by double-digit percentages.
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