Online Local Ad Spend Predicted To Grow 46 Percent in '05

Local ad spending online ballooned 28 percent to $2.7 billion last year, according to a report released Monday by research company Borrell Associates. The report, "What Local Web Sites Earn: 2005 Survey," based on a survey of Web sites of 2,177 local media properties, predicts even higher expansion--46 percent, to $3.9 billion--this year.

Local marketers of computer-related services spent the largest proportion of their ad budgets--7.3 percent--online, followed by bars and restaurants--3.3 percent--and business-to-business advertisers--3.2 percent. Borrell defined local advertising as "advertising placed by locally based businesses for locally focused online messages."

Almost half of the online local ad dollars--44 percent--went to sites controlled by newspapers, while 40 percent went to Web-only sites, such as the online job board Monster.com. Online Yellow Pages and Internet directories accounted for only 6 percent of the total local online ad spend, while paid search received just 5 percent; television stations received 4 percent; and radio stations received 1 percent.

Among newspaper Web sites, classified ads for jobs, cars, and real estate proved to be large sources of growth. Recruiting ads accounted for 43 percent of newspaper Web site revenues, while automotive ads accounted for 15 percent and real estate ads came to 12 percent. The report also found that nearly half of newspapers' online revenue--46 percent--came from up-selling to print advertisers.

While television sites accounted for only $119 million last year, that figure represented a 58.8 percent increase from 2003. Car ads were particularly important to TV Web sites, accounting for 18.8 percent of ad revenue for the typical TV Web site.

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