• by Erik Sass  @eriksass1, June 2, 2008

A new survey of local Web site revenues by Borrell Associates found that newspapers are still enjoying strong growth in local online advertising--but they are losing share to pure-play online operations. Newspapers are not online: Traditional media like broadcast TV, radio and Yellow Pages publishers will also see their market share stagnate or decrease in 2008.

Borrell's survey of 3,108 local media properties--including daily and weekly newspapers, TV stations and radio stations--found that local newspapers took in about $3.1 billion in local online revenue in 2007, giving them roughly 36% of the total last year. However, this was spread thin over a large number of Web sites--so on average, each newspaper's local market share was actually just 11.7%.

Worse, newspapers are going to lose market share in 2008, even as their local online revenues continue to increase, because pure-play online competitors are enjoying much higher rates of growth. In 2008, newspapers are projected to get about $3.7 billion, a 19% increase over 2007. But that will be just 28% of the total, representing an 8% decline in share.

Overall, the local online ad market is booming, Borrell found, projecting total local online revenues of $13.1 billion in 2008. That's a roughly 50% increase over 2007's $8.7 billion. Unlike most traditional media, Borrell expects that local online advertising will benefit from an economic slowdown in 2008, as large and small advertisers alike seek more measurable channels for tight advertising budgets.

In 2007, local broadcast TV stations took in just $772, but that's poised to grow 55% to $1.2 billion; thus, local TV's market share will remain steady at around 9%.

Also in 2007, Yellow Pages publishers took in $993 million in local online dollars, equaling roughly 11% market share. In 2008 Borrell projects 20% growth to around $1.2 billion, meaning that their market share will also decrease, to about 9%.