There is a strong uptick in local online ad spending that we began seeing toward the end of 2004. It is continuing into 2005. We're projecting that local ad spending will increase a 46% over last year, more than twice the growth rate for all Internet advertising. We've made an executive summary and the full list of spending data for 210 U.S. markets available below. You'll also find estimates for locally-placed paid search advertising in those markets.
This follows the early pattern of other media (i.e., broadcast TV in the 1960s, cable in the 1990s) that saw a surge in spending by local advertisers when household penetration hit critical mass. For the Internet, we believe that point came at the end of 2003. More than 75% of U.S. households currently have Internet access. (source: Nielson//NetRatings).
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Local Online Ad Spending Growth
($ in Millions)
2005 Borrell Associates Inc.
Key Report Facts & Stats
- Total local online ad spending will hit $3.9 billion in 2005. This is a 46% increase over 2004 and more than twice the growth rate of overall Internet advertising.
- Paid search averages 8.4% of all locally spent online advertising. The total we're projecting for 2005 is $329.5 million. Without paid search, local markets would see a 33.8% increase in 2005.
- There was no discernible pattern for which markets are seeing greater growth. Large markets like San Francisco and Miami had below-average growth estimates of 21% and 26%, respectively, while Washington, D.C., appeared at the top of the list with projected growth of 69.8%.
- Major spending categories are General Merchandise Stores, which account for 30.6% of all local online ad spending (though we've seen this reach as high at 70% in some markets), Credit & Mortgage Services and Health Care. We're seeing very strong growth in the Real Estate category as well, particularly in paid search.
About Borrell Associates:
Borrell Associates Inc. is an executive-level research, consulting and project firm. Our strategic advertising and management work focuses on interactive local media and information services with a concentration on newspapers, broadcast stations and directory publishers.
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