Slower growth seen for local online ads

Local advertisers are expected to increase their online ad spending by just 6 percent this year, a sharp pullback from growth of 46 percent in 2008, Borrell Associates Inc. said in an annual survey of media companies.

Borrell is forecasting a rebound in 2010, with growth of 13 percent, and said quicker improvement in the economy could lead to more growth than currently forecast for this year. The long-term forecast calls for local online ad spending to peak at $15.9 billion in 2011 before contracting the following two years to $15.3 billion.

The survey included 4,353 media companies representing more than 6,000 Web sites in the U.S. and Canada, including 75 percent of TV stations, 59 percent of daily newspapers, 27 percent of radio stations, and 388 independent local sites.

Newspapers remain overly dependent on real estate, automotive and help-wanted classified ads, the report said. After peaking at $19.6 billion at the turn of the century, newspaper print classifieds have plunged for eight consecutive years, hitting $9.9 billion last year.

The $2.4 billion in revenue newspapers generated in online classifieds represents only about 25 percent of their annualized losses in print, the report said.

On average, newspapers saw revenue from online real estate classifieds fall 2.6 percent last year, although that number is expected to rebound by 6.3 percent this year as real estate agents return to newspaper Web sites, Borrell said.

Online real estate classifieds accounted for 7 percent of classified revenue at newspapers with circulation of 2,000 to 10,000, and nearly 14 percent at papers with circulation of 200,000 to 500,000.

Local advertisers bought $12.6 billion in online ads in 2008, Borrell said, with "legacy" print and broadcast media like newspapers, TV and radio stations beginning to take back ground lost to "pure play" Internet companies like Google, Local.com and Interactive Corp. ...CONTINUED

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