By 2011, those figures will be $7.8 billion and 17.7%, eMarketer projects.

"The promise of local online advertising, at this stage, surpasses the reality," said David Hallerman, eMarketer senior analyst and author of the report. However, he said, local online ads will accelerate due to "the wealth of small and midsize companies potentially available as online advertisers, the increased use of local Internet sites and services by individuals, and the development of local online ad networks connected with local media, such as newspapers."

eMarketer also estimated that by 2011, less than one-third of all U.S. ad spending (32.2%) will be locally targeted--with the Internet accounting for only 7.6% of all local ad spending.

U.S. Local Online Advertising Spending, 2006-2011

(billions)

U.S. Local Online versus Local Total Media Advertising Spending, 2006-2011

(% of total online and % of total media)

Note: eMarketer benchmarks its U.S. online advertising spending projections against the Interactive Advertising Bureau (IAB)/PricewaterhouseCoopers (PwC) data, for which the last full year measured was 2006. eMarketer benchmarks its U.S. total media ad spending projections against the Universal McCann data, for which the last full year measured was 2006. Local online advertising includes both local and national businesses advertising in local markets, using any of the following advertising formats--paid search, display, rich media, video, classifieds, sponsorships, referrals, email. Total media figures include television (broadcast & cable), radio, newspapers, magazines, Internet, outdoor, direct mail, Yellow Pages and others (such as cinema advertising).

Source: eMarketer, August 2007