Local online advertising growing faster than mobile - report

A NEW study has shown that whilst local online advertising may be booming, mobile marketing is yet to make the same inroads into the local media landscape.

The study by Research and Markets has show that whilst it has been a horrible year for advertising overall, local online and some companies are seeing double and even triple digit growth for their operations. Local online advertising is growing at a 12 per cent clip this year, and 2010 should see further growth.

The report forecasts 2010 local online sales to hit $14.9 billion, or 5 per cent higher than this year’s projections. Yet whilst mobile advertising is acknowledged as a hot topic, the report projects it to be a relatively small category locally - only $500 million in 2010.

The Mobile category is not likely to play a significant role on the local media landscape next year, according to the report, with the publisher estimating that local buys will comprise only 20 per cent of all mobile advertising, totalling slightly more than $500 million in 2010. Still, the report concedes that mobile is a category worth watching as the audience grows - and as couponing, mobile directory advertising and sponsored text messages and viable applications for local marketers. The game in 2010 will centre more around stealing market share than growing the market.

The trough is predicted to get even deeper in 2010 as local online advertising continues to slow and as a bevy of new competitors rush in to become purveyors of hyperlocal everything. PBS, ESPN, AOL, Hungton Post, The Knot, Microsoft, Yahoo and scores of others have announced plans to reach deep into local ad sales.

Meanwhile, the next waves are forming on the horizon, as they always do, and companies that know what to look for can begin moving to catch them. Online promotions and mobile advertising are two such waves. This 2010 Outlook orders observations and forecasts intended to help that process.

Local online advertising will hit $14.2 billion this year, 12 per cent more than 2008. For 2010 the publisher is forecasting that it will grow just 5 per cent, to $14.9 billion. In the past five years, local online advertising grew at a compound annual growth rate of 46.5 per cent. For the next five, they are expecting that rate to be 2.9 per cent. The forecast is predicated upon a slow economic recovery and the fact that "online" as a local media advertising category is approaching what the publisher believes is saturation. Online media buys currently hold a 13.8 per cent share of all local advertising. The publisher believes it will peak at a 16 per cent share by 2013.

The report concludes that local advertisers have had plenty of time to assess the effectiveness of banner ads, search, streaming video and e-mail advertising peddled to them over the past decade. They will abandon programs that just do not work, and embrace those that produce measurable results. They are also likely to continue following a few years behind the spending patterns of national advertisers by expanding their use of online promotions, which give them more direct access to their customers and prospects without having to rely as heavily on media companies to help reach them.

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