• by Gavin O'Malley  @mp_gavin, November 21, 2008

Can the video boom save local online advertisers from the tough economic times ahead? In fact, that is just what several local ad networks and technology providers are betting.

Attempting to capture a greater share of video, local search network Local.com on Thursday announced the integration of local video ads throughout its local search Web site.

"Local video bridges the product gap that exists between businesses that advertise in print, but perhaps don't have the budget to move to television advertising yet," said Kim LaFleur, Local.com vice president and product management. "And unlike TV advertising, ROI is fully trackable."

Local.com is now incorporating geo-targeted video ads from Jivox, a San Mateo, Calif.-based Web video startup with a focus on local businesses. Local.com plans to aggregate geo-targeted video ads from other providers, before ultimately selling video ad units to its growing base of direct Local.com advertisers.

Just last week, EStara, a provider of call-tracking and conversion solutions, debuted a back-end service that allows Web publishers, e-commerce, and local directories to add revenue and lead-generating tools to their video.

"The demand is everywhere for video," said Shari Solis, vice president of Media Business at Art Technology Group--a Cambridge, Mass.-based provider of e-commerce software and Web optimization services that acquired eStara in 2006.

The eStara Video Connect service facilitates actions like inbound phone calls and visits to advertisers' Web sites, which can then be tracked and measured in real-time.

"It's the measurability and accountability we provide that publishers and advertisers are looking for," Solis added. "That and the popularity of video and going to sustain local publishers."

With its new video service, eStara is targeting a range of companies, including ad networks, magazine publishers like Cox Communications, retailers like Best Buy, insurance providers from Allstate to Geico, and local directories like CitySearch.

Because of the ailing economy, locally focused research firm Borrell Associates recently changed its interactive ad-spending forecast dramatically, representing a drop of one dollar in every seven.

Spending by local advertisers--which has grown at a frenetic 47% this year--is expected to diminish to a paltry 7.8% in 2009, Borrell reported.

Looking ahead, however, the Kelsey Group forecasts that the local video ad market will grow to 747,000 video-enabled small and medium-sized businesses and $1.5 billion in revenues by 2012.