Growth Slows For National, Traditional Media But Local Online Ad Spend Continues To Rise: Report

While online advertising in general may be showing signs of slowing, the case appears to be the opposite when focusing specifically on local interactive ad spending, according to projections being released next week by media consultants Borrell Associates. Its report forecasts this year’s U.S. local online ad spending will end up at $7.5 billion — up 31.6 percent over 2006 compared to a 20 percent increase for national ads. Last year, the local category grew 19 percent over 2005, though from 2004 to 2005, online ad spend was up nearly 80 percent. As the pool of prospects among existing print or broadcast advertisers is drained, local websites have been aggressively pursuing non-traditional advertisers as the route to growth. The added drive from the local ad side has helped boost the number of locally based, online-only salespeople, whose ranks grew 26 percent in 2006, the report found. Other findings include:

Old Media Dominates, For Now: While non-traditional efforts have increased, newspapers continue to hold the dominant share, controlling 35.9 percent of all locally spent online advertising.

Newspapers see online ad growth slowing: Traditional media expressed growth rates considerably lower than a year earlier. Belo, Gannett, Tribune and Journal Register all reported that online revenues increased between 16 and 17 percent in Q1, while NYTCO and Scripps had 20 percent growth. McClatchy, which saw online revenues increase a slim 5.4 percent in Q1, reported its first-ever year-over-year decline (2.1 percent) in April.

Old “Frenemies” Come Together: As announcements from Google, Yahoo, Monster and others in recent weeks have shown, internet companies are gradually taking a larger piece of the local ad spend pie, accounting for 33.2 percent of media expenditures in that area. And while competition still exists between internet companies and newspapers, new alliances are being forged, which could eventually help newspapers regain share.
(Via LostRemote/Terry Heaton)

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