As has been forecast for all of online advertising, local Web ad revenues are poised for growth. A new report shows local online ad spending is rising at a 50 percent clip, and will hit $13 billion this year.
Borrell Associates pegs 2007 local online ad revenues at $8.7 billion in its new “What Local Media Web Sites Earn: 2008 Survey” report. Double-digit growth over the next year and a half is projected, based on a survey of over 3,000 local media properties. Following that 18-month upswing, however, Borrell expects growth rates to taper into the single digits by 2012.
Among the reasons for the expected increase is the sluggish economy, suggests Borrell. In short, local advertisers want more cost efficient alternatives to traditional media buys, and they’re finding them online.
The report suggests newspaper publishers have a head start on other online media entries, though the others will continue to nip at their heels. Newspaper sites grabbed over $2 billion in local Web ad revenue in 2007, more than all other local online media companies combined, according to the report. One thing benefiting online paper publishers is expansion of their ad client base. Nearly 60 percent of those dollars came from Web-only advertisers, the report shows. Some sectors paper publishers are reaching out to include financial services and smaller local retailers, said Borrell Associates VP Peter Conti.
“In the past they had overlooked a lot of the categories,” he continued.
Other positive moves include creating standalone sites and new ad and content products. “They’re offering more products and more information, and in some cases, even developing new sites that have nothing to do with the old media,” said Conti.
Still, ad revenue collected by paper sites represents about 25 percent of total local online ad market share, compared to 44 percent four years ago. Conti chalks this up to a lingering fixation on maintaining dwindling classified ad revenues. Referring to classifieds as an “Achilles heel” for paper sites, the report notes 63 percent of total classifieds in 2007 were online classifieds.
Though newspaper publishers have their own set of problems to contend with, they could have a leg up in the ad sales department, according to the report. It notes newspaper publishers in total have an estimated 3,800 sales reps dedicated to selling online offerings, and larger outfits may have up to three dozen dedicated online ad salespeople.
“Most financially successful sites are the ones that have their own independent [online] sales force,” said Conti. “They can put together the kinds of packages and the advertising that’s necessary to sell online without worrying about cannibalization or lack of focus.”
Local radio sellers could learn something from this approach. The report suggests online radio revenues are hindered by the common use of terrestrial radio salespeople for online ad sales. Although the firm found online radio revenues rose about 50 percent from $125 million in ’06 to $189 million in ’07, Borrell anticipates growth to slow to about 35 percent this year.
According to the firm, TV stations it surveyed “nearly doubled their Web sales forces in 2007 and are expecting to do the same in 2008 — though ‘doubling’ often means going from one rep to two.”
In conjunction with the proliferation of broadband access, television’s video prowess gives it a boost as Web video consumption grows. “Their traditional background is bringing audio and video to the table,” said Conti, noting video content and offerings such as directories with video ad offerings “bring in a lot higher CPMs.”
Borrell expects ad spending on local TV sites to go beyond $1 billion this year. In 2007, total online television revenues grew to $772 million, a 72 percent leap over the previous year.
Like other traditional local media moving online, yellow pages publishers are dealing with falling print revenues. Battling the drop in usage of print directories and related ad revenue declines, they have worked towards righting the ship online by providing interactive ad offerings such as search ad services. According to Borrell, Internet revenues for directories publishers will reach $1.2 billion in 2008, up from $993 million this year.
City-specific resource and community sites some owned by newspaper firms and others independent, have also collected local ad dollars from traditional players. “They’re’ sucking out online ad dollars from local markets, too,” said Conti. “They have a higher rate of return,” he added. “They seem to be a lot lighter-weight operations, more unencumbered by traditional [operations].”
Despite the fact that it faces growing competition from Facebook, Instagram and Snapchat, Google-owned YouTube is still one of the most popular ... read more
Amazon prides itself on being the most “customer-centric” company in the world, but according to investigative journalism non-profit ProPublica, Amazon’s algorithms are often anything but ... read more