eMarketer reports that despite obstacles to local internet advertising, the market will almost triple by 2008.
The local online ad market continues to develop more slowly than some originally expected. The next few years, however, will see much livelier growth than earlier in the decade due to factors such as a critical mass of internet users (where 69 percent now connect via broadband); more web publishers from the traditional media side (think newspapers and TV stations) needing to recapture lost ad revenue; and enhanced local advertising resources such as mapping from Google, Yahoo! and other providers.
One should never underestimate inertia and tradition when trying to gauge future paths for the local online ad market. From the habits of yellow page directory and newspaper ad salespeople, who look to print's profits more than to the internet's, to the small business that has little time or marketing budget for new marketing methods, several concerns continue to check extensive advances of local online ad spending.
By its sheer breadth, local advertising is far more complex than it need be. With advertising networks such as DotConnect Media for newspapers and Local Media Network for television stations, the promise is one buy, many markets. When the Targets and Honda Dealers of the world look to reach online local audiences, these are the types of solutions worth supporting.
It is worth noting, however, that the best possible scenario for the newspaper industry will be found on the internet. Demographic patterns show that the younger the audience, the less likely they read the paper for news. But in local markets, the same newspaper brand can establish itself as a metropolitan portal for news, regional activities, features and information (a.k.a. advertising) about local merchants, service providers and the like.
Overall, the success of local search marketing depends on three interlocked elements: one, monetizing phone calls for those small and mid-size businesses (SMBs) with little or no web presence; two, more hosting of simple websites for SMBs by Yahoo, Microsoft, Google and the like; and three, marketing these local services to consumers so that they search locally far more often than presently. The more these internet giants -- or other, and perhaps more innovative, online companies -- help local enterprises either work the way they are accustomed to (often by phone) or give them a website jump start, the more likely they will advertise online. And the more individuals can expect relevant results from their local online research, the more they will visit and click (or call).
"This is stuff people need and want in their everyday lives, and to the extent they can find it online, they are starting to use these tools."
-- Greg Sterling, principal analyst, Sterling Market Intelligence; Washington Post, April 4, 2006
In fact, U.S. local online ad spending will surpass the $1 billion mark for the first time only this year, according to eMarketer projections. However, that figure will more than double to $2.8 billion in 2008, and will reach nearly $5 billion by 2010.
David Hallerman is a senior analyst at eMarketer. This article is drawn from the new report Local Online Advertising: Measuring The Potential. Contact eMarketer directly.