I haven’t seen the report; I’m just going off today’s MediaPost article.
With “local” there’s always a question of definitions: what’s in and what’s out? Borrell uses a fairly expansive definition, which includes paid search, display and email (I’m not 100% sure that’s everything in their definition). Consequently, the firm predicts a 32% increase in geotargeted advertising online, growing to $7.7 billion by next year.
The firm identifies Real Estate and Cars as the local ad category leaders, which it says constitute a third of all locally targeted online advertising dollars today.
Borrell estimates local paid search will amount to $1.8 billion by next year. By 2010 the research firm asserts that geotargeted email and paid local search will together represent 50% of online local advertising. The overall value of the local online ad market will approach $10 billion at the end of the forecast period.
Contrast that with a traditional media market of more than $100 billion.
There are now at least four local forecasts in the market: Borrell, Kelsey, Jupiter and eMarketer (playing off those to some degree). Each uses a different methodology and different definition of “local.” Borrell and Kelsey are quite close but Kelsey doesn’t get into display and Borrell doesn’t really get into IYP or wireless. Jupiter is more skeptical/conservative and eMarketer is the most conservative but doesn’t offer a five year forecast in this area.
You might use one set of numbers for investors and PR and a more conservative set internally for planning purposes. But the point is that local is a strong growth segment. The only real issue is timing. While there’s no question of consumer demand, on the advertiser side local remains a challenging proposition as I’ve discussed many times.
It’s challenging for national advertisers to efficiently get the local reach they want, especially with display advertising. And it remains notoriously challenging to efficiently aggregate local businesses and bring them into online media . . . But it’s starting to happen and pick up momentum.