• Borrell Associates, Tuesday, July 14, 2009 12:45 PM

Borrell Associates did an assessment of advertising on social networking sites and found that nearly 20% of all ad spending is by local businesses. The research firm is now estimating that local advertisers will account for roughly $641 million of the nearly $3.3 billion spent on social networking sites this year.

Of course, as Gordon Borrell, who wrote the company blog post citing the research, says, that figure is still just "a drop in the bucket" compared to local online ad spending overall, representing just 3% of the total. "If we estimated it for individual local markets (we usually don't do that until an advertising segment reaches $1 billion), it would equate to a few hundred thousand dollars or less in most markets," Borrell writes.

Meanwhile, 57% of all local social networking spending is going to either MySpace or Facebook, which are the only sites to generate more than $100 million from local advertisers. Facebook is the biggest share-getter, Borrell says, with 74% of its ad revenues coming from local businesses. Local ads are also being placed through Google and Yahoo's contextual placement program, though these are most likely being bought through an intermediary.

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