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Outlook for 2007: Pac-Man Pace for Local Online Ads

  • Publication Date:September 2007
  • Publisher:Borrell Associates
  • Product Type: Report
  • Pages:

Outlook for 2007: Pac-Man Pace for Local Online Ads

Local online advertising faces another banner year in 2007 as local businesses continue to seek new, more efficient ways to drive traffic to their Web sites and, ultimately, to their businesses. It will grow to a $7.7 billion category in 2007, reflecting 31.6 percent growth over 2006.

The online advertising stampede in local markets has Web site operators scrambling to add hunters. About half of the local Web sites were adding to their sales forces this year already, increasing the small but growing army of online-only sales people by about 37 percent. Some of the largest local Web sites now have three to four dozen salespeople dedicated to online sales.

Of course, recent growth rates can't continue forever. We are projecting a slowdown in the growth of standard online ads by 2008, a further slowdown in 2009, and a flattening or perhaps even a mild decline in local online advertising by 2010 as online promotions begin to attract more ad dollars away from traditional advertising.

In the near term, online ad spending will continue to migrate toward more targeted forms of online advertising such as e-mail and paid search. We also expect to see local video advertising become a trackable category in 2007.

The biggest online ad opportunities currently revolve around real estate and automotive. Combined, these two categories comprise slightly more than one-third of all local online advertising.

  • Executive Summary
  • Chapter 1 - Growth Continues, But Slowdown Inevitable
    • Figure 1.1: Local Online Spending Now Totals 2.1% of the $284 Billion Advertising Pie
    • Figure 1.2: Projected Growth of Local Online Advertising in 2007
    • Figure 1.3: Growth of Local Online Advertising, 1998-2010
    • Figure 1.4: Online's Share of Newspaper Company Revenues
    • Figure 1.5: Change in Local Online Share, 2006 Winners and Losers
  • Chapter 2 - High Growth Categories: E-Mail and Search
    • Figure 2.1: Search and E-Mail Share of Local Online, 2007 & 2010
    • Figure 2.2: Local Advertisers Compete for City Keywords
    • Figure 2.3: Toledo.com Develops E-Mail and Search Advertising
    • Figure 2.4: Panel Response: "The use of targeted consumer e-mail lists becomes common."
  • Chapter 3 - Ad Categories Showing Most Promise
    • Figure 3.1: Real Estate, Automotive Dominate Locally Spent Online Advertising
    • Figure 3.2: Most Real Estate Agents Still Don't Advertise Online
  • Appendix A - 2006 US Online Marketing Expenditures
  • Appendix B - 2007 US Online Marketing Expenditures
  • Appendix C - WebAudit™ Methodology
  • Appendix D - Growth of "Promotions" = Ad Spending Compression
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