Local ad spending online may be the nexus of traditional publishers' greatest hopes for future growth, but the anticipated spoils have already generated fierce competition, according to a new report from Borrell Associates.Our take:
Local ad revenue online looks likely to grow by 50% this year to $13.1 billion from $8.7 billion in 2007, Borrell said. The expansion can't sustain that pace much longer, though; its compound annual growth over the next four years is likely to fall to 15% from 48% over the last four years.
Traditional media, whose sites are venturing further and further afield from the look and function of their progenitors, is generating a minority of the "phenomenal" growth. "Most of it, however, comes from pure-play companies delivering lower-cost advertising that intercepts consumers not as they are reading news online," the report said, "but as they are using the web to research products and prices."
Why is this important to our industry? When taken together with the fact that other local advertising media are up (newspapers, the Yellow Pages, etc.), it illustrates a broader trend towards localized, highly target-specific advertising, which is where digital signage truly thrives. As WireSpring's Bill Gerba has written about before, digital signage network owners are finding that local ad sales can be highly lucrative, and are often easier sales to complete than mega-deals for national buys with major brands, to boot.