• by Wendy Davis  @wendyndavis, October 19, 2005

Media executives allocated a greater share of their clients' online dollars to Web sites of local media in the third quarter than earlier this year, according to a study by Deutsche Bank in conjunction with MediaPost, released this week.

For the report--the fourth in an ongoing series of quarterly studies of media professionals by MediaPost and Deutsche Bank--87 media executives were questioned earlier this month about their clients' experiences with Internet advertising in the third quarter, and expectations for the fourth quarter. InsightExpress conducted the online survey, using members of the MediaPost advisory panel.

Media buyers and planners reported spending 18 percent of their clients' online display ad budgets on local media, including Web sites of local TV stations, radio stations, and newspapers. In the first two quarters, executives said they spent just 13 percent of display budgets at local sites.

The shift to local media bears out a prediction made earlier this year by media research firm Borrell Associates. That group forecast in January that local ad spending would surge to $3.9 billion this year--a 49 percent increase from 2004's $2.7 billion.

Among the portals, the largest share of display spending--12 percent--went to Yahoo!, while MSN captured 8 percent and AOL accounted for 5 percent. Targeted content sites garnered 34 percent of online display ad dollars.

Google again captured the bulk of paid search spending, accounting for 51 percent of respondents' search budgets. Yahoo! Search Marketing--formerly Overture--accounted for 29 percent, while MSN took in 6 percent.

When asked whether MSN's entry into paid search would affect their budget allocations, responses were mixed. "The launch of MSN AdCenter will probably enable us to add another paid search service," replied one respondent.

Others said it was too soon to make any predictions. "I'm going to take the wait-and-see approach," offered one respondent, adding: "I already have a great deal of coverage from Overture and Google, so I don't know that MSN has the inroads to command much ... so perhaps I can get a bargain."