The Transfer of Local Dollars Online

Picture 2MediaPost has an interesting article this moring in which it analyzes declines in local ad spend across media and argues that much of the “missing” money from traditional media has gone online:

Although quarterly figures are not available, local online ad spending rose from $4.8 billion in 2005 to $12.6 billion in 2008, an increase of $7.8 billion. Total local ad spending for newspapers, radio and broadcast TV fell from $54.6 billion in 2005 to $48.9 billion in 2008, a decrease of $5.7 billion.

Where local revenue growth rates have gone increasingly negative for traditional media, local online spending was booming from 2005-2008, with annual growth rates of 78%, 19%, 31.6% and 68%, respectively.

The first “local online ad spending” number is probably from Borrell, although not sourced. The numbers cited otherwise are from various sources. There are no definitions of “local” for online except a reference to “local search.”

At a high level the analysis is accurate; ad dollars previously spent on local TV, radio and newspapers have gone elsewhere. However the implied 1:1 transfer of those ad dollars to online (especially to local online) is somewhat misleading. That’s because they’re not directly transferring into online “ad spending” in a direct or equivalent way.

Realtors who stop advertising in the newspaper are not taking those identical dollars and simply spending them at Trulia or Zillow for example. Nor are SMBs who decrease their print YP ad spend taking that money and simply spending it on SEM at Google or an IYP site.

And in the wake of the churn that I’ve been writing about and that Borrell documented in the Local SEM segment, it’s also clear that the issue “on the ground” is more complex — and problemmatic in the case of SMBs — than the 30K foot view suggests.


One Response to “The Transfer of Local Dollars Online”

  1. Stream o’ consciousness for June 18th | Mike Orren Says:

    […] The Transfer of Local Dollars Online « Screenwerk — 9:57am via Google […]

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