Borrell: Local Online Ad Market Will Be Bigger Than Expected This Year

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Borrell Associates — which earlier this year provided a very bearish outlook for growth in the local online ad market — has changed its mind. The research firm now expects the market to grow by 11 percent, up from its initial projection of 8 percent in January. That means the market should reach $14.03 billion this year, up from $12.9 billion in 2008 — but the jump is likely to be even bigger than that. Says CEO Gordon Borrell in a blog post: “We take a lot of pride in our projections, which have been on target year after year. But we may have been far too conservative earlier this year when we projected that local online advertising would grow 8% in 2009. At the end of the first quarter, the increase looked closer to 11%. When we finish collecting our second-quarter data in the next few weeks, I

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Certain areas of online advertising are experiencing tremendous growth. At Hydra we have seen tremendous growth in Cost Per Action (CPA) advertising. Regardless of whether it's local or national, marketers will pay if they know they will get the rate of return that more than pays for the ad. With CPA you only pay for the ads that convert to a specific action such as a lead or a sale. Now that is something that more than pays for itself.

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