Borrell: Local Online Spending May Be Up

From a blog post by Gordon Borrell:

[W]e may have been far too conservative earlier this year when we projected that local online advertising would grow 8% in 2009. At the end of the first quarter, the increase looked closer to 11% . . .

Phenomenal as it may seem, we’re getting data indicating triple-digit growth for some companies selling interactive advertising. These are definitely the “get it” companies that have hired dedicated sales forces and are plowing ahead with the products advertisers are buying. We aren’t, however, seeing triple-digit growth from companies that continue to labor under the delusion that “convergence sales” is a viable strategy.

Right now we’re pegging local online advertising at $14.03 billion, up from our estimate of $13.3 billion issued back in January.

This may indicate something of an “inflection point” motivated by the recession in part. But it would also appear to be driven by competition among local media companies and independent sales channels. Any comments Gordon?

2 Responses to “Borrell: Local Online Spending May Be Up”

  1. Gordon Borrell Says:

    You’re right about the intense competition, Greg. Market pressure is driving these numbers up, not wild enthusiasm over fantastic results. There are more than 100,000 local advertising reps in the U.S., and the largest single product being sold (by about 36,000 of them) is interactive media. We did some primary research on advertisers (small base — only 100) last month and was shocked to find that the majority received at least 3 sales pitches PER WEEK for interactive products. It’s like a balloon, though. Blowing harder into it now just means its limits will be reached faster. We are still noodling the idea that interactive, now at about 12% of all local ad spending, will peak out at 18%. If that’s the case, I suspect the big slowdown might be in 2011. Up for debate, though.

  2. Greg Sterling Says:

    Thanks Gordon for the additional color. If local online marketing tops out at 18% that would still be less than the internet’s share of voice from a local consumer perspective.

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