Web Ads to Draw Nearly 25% of Local Spend by 2015

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Online advertising by local businesses will account for almost a quarter of all local ad spend by 2015, says local media research and consulting firm BIA/Kelsey. The company's new U.S. Local Media Forecast points to channels such as daily deals offers as increasingly popular with consumers, and thus a market ripe for local advertising dollars.

According to BIA/Kelsey, local online ad spending by small and medium-sized businesses will represent 23.6 percent of all local ad spending by 2015, growing from $21.7 billion last year to $42.5 billion by 2015. The economic downturn has tempered the company's predictions, previously more bullish. Back in 2006, the firm predicted local search and online classified spending alone would hit $31.1 billion in 2010.

BIA/Kelsey suggested maturing online ad products, increased usage of smartphones and tablet devices, and continued disruption of traditional newspaper models are driving momentum for local online ad spending.

The research outfit pegs 2010 online local ad spending at 14.1 percent of all spending by SMBs, and expects 2011 online local ad expenditures to account for 16.2 percent of the local ad pie.

The company surveyed clients and non-clients and compiled data from various sources to determine the findings. The report, released today, indicates overall local advertising revenues will increase from $136.3 billion in 2010 to $153.5 billion in 2015. However the projected revenue for 2015 is still less than the total for 2008, when spending hit $156.3 billion, according to BIA/Kelsey.

As firms like Yahoo and Gannett explore local daily deals offerings, BIA/Kelsey forecasts the daily deals space will generate $3.9 billion in consumer spending by 2015.

Another recent local online spending report from Borrell Associates found spending on social media marketing by SMBs would grow more than 30 percent this year.