Sept 2007 Local Online Advertising: Measuring the Market

Industry Stats & Data by eMarketer

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Local Online Advertising: Measuring the Market, September 2007

US local online advertising spending has a long way to go. The dollar gap between local online and local total media ad spending is huge, with $97 billion still going to offline media such as yellow pages and print newspapers. A mere $2.9 billion, or 2.9% of all local ad spending, will go online in 2007.

At this stage, the promise of local online advertising is greater than its results. Through 2011, spending for local online advertising will grow at a faster rate than either national advertising or total online advertising, making it a key growth area in a maturing Internet ad space.

Comparative estimates for 2007 vary from $2.5 billion (The Kelsey Group) to $8.2 billion (Veronis Suhler Stevenson). eMarketer expects local and national businesses advertising in local markets to spend $2.9 billion in 2007, rising to $7.8 billion in 2011.

One key source for the divergence has to do with the difficulty in measuring the local market, in which there are hundreds of locales, thousands of sites and millions of potential advertisers. Questions of how to define local online advertising create further differences. Are local ads just "advertising placed by businesses with a physical presence in a given DMA [designated market area] that is intended to reach consumers and businesses in the same DMA"? That's how Borrell pegs it. Or do you include both local and national businesses advertising in local markets, which is how eMarketer defines local online?

What the researchers can agree on is strong growth in the years ahead. Next to e-mail, local search is the most frequented of Internet services, according to Piper Jaffray's "User Revolution" report and its "2006 Online Media Survey."

The increasing use of local search will do much to change the course of local ad spending. Local companies are beginning to see how more of their customers research online before or instead of using yellow pages or local print newspapers. These essentially conservative companies, who typically cannot afford advertising experimentation, will switch to the Internet as audiences continue migrating to the Web and away from traditional local media. It's only a matter of time before online local ad spending catches up with today's reality.

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