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Strong Growth for Local Online Advertising

Slow rebound overall but a 30% increase online

September 22, 2010

Local advertising spending is holding up better in 2010 than previously expected, according to estimates from BIA/Kelsey. The firm, which initially predicted a nearly 1% drop in overall local ad spending this year, forecast growth of 2.1% to $133.3 billion by year-end.

Drilling down into where that spending will occur, online is the source of all growth in the space. Traditional local spending, after a dramatic plunge in 2009, will continue a downward trajectory through 2011 and will not recover to earlier spending levels. But rising spending on the web will fuel overall increases in the local space from 2010 through 2014.

US Local* Advertising Spending, Traditional vs. Digital**, 2008-2014 (billions)

The growth of online local ad spending, along with the stagnation of traditional efforts, will mean online takes an ever greater slice of the local advertising pie in coming years. Online has already increased its share by 50%, from 10% in 2008 to 15% this year. By 2014, BIA/Kelsey expects nearly one in four local ad dollars to be spent on digital.

US Local* Advertising Spending Share, Traditional vs. Digital**, 2008-2014 (% of total)

“The strength and popularity of certain media over the next five years in the local media marketplace will dramatically affect the distribution of advertising spending for many of the advertising categories,” said Tom Buono, CEO at BIA/Kelsey, in a statement. “Players in the local market need to be aware of their media competition for each of these advertising categories.”

In August, Borrell Associates released somewhat more conservative estimates of local online spending. The firm predicted advertisers will spend $13.7 billion on local online ads this year, a number set to increase 17.5% to $16.1 billion in 2011.

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Check out today’s other article, “Twitter Users and Bloggers Open to More Than Earned Media.”


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