Along with the rest of the online ad market, the local sector has enjoyed rapid growth during the past five years.  And in 2009, Borrell Associates predicts a 12% increase for local online advertising. But after this year, Borrell analysts expect 268425_circular_paversthe growth rate to slow significantly.  The company also foresees online formats taking a larger share of local ad budgets.  Marketers,  currently allocating 13.8% of local ad budgets to online formats, will increase the percentage to 16% by 2013.

Another key shift will occur by 2013 according to Borrell Associates. This year, marketers are on track to spend 86% of their local online ad budget on advertising and 14% on promotions. In 2013, this allocation will be quite different:

  • Advertising 69.5%
  • Promotions 30.5%

This expected change may be the result of new scrutiny by cost conscious managers.  Marketers are under pressure to demonstrate a return-on-investment when it comes to advertising and the results of promotional campaigns are easier to measure.

The increasing importance of the local online ad market was underscored by statistics from another research shop. comScore reported that local advertising comprises as much as 10% of total online display advertising. Though display is considered a shrinking market by some industry experts, when comScore looked at specific segments, such as regional/local Web sites, it calculated that over 25% of display advertising was classified as local.

“Locally targeted ads are an increasingly important component of the digital ad landscape because they represent a more efficient allocation of ad dollars,” noted comScore vice president Brian Jurutka.

As marketers focus on efficiency and cost containment, the predictions for growth in the local ad market, and promotions, make perfect sense.

[Sources: Borrell Associates release, emarketer.com release, comScore release, October 2009]