Geotargeted banner ad growth attributed to lower priced leads

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Geotargeted banner ad revenue is expected to grow 16.6% to $1.04 billion in 2009, according to BIA/Kelsey in its Interactive Local Media spending forecast. Double digit growth continues in 2010. Geotargeted display will increase 13.1% next year to a total of 1.18 billion. By 2013, it will swell to $1.9 billion, a compound annual growth rate of 16%.

The locally bought portion of the market, which primiarly comprises small and mid-sized businesses, will see the highest growth rate, growing from $45 million in 2008 to $565 million by 2013.

The Yahoo-led Newspaper Consortium is the dominant seller in this space, according to Kelsey, which said this group will exceed $84 million on a run-rate basis by the end of this year. Other networks include Fox Interactive media.

There is more display inventory in the marketplace, Kelsey said, which means less competition when compared with the search market and where marketers can get similar leads for less cost.

“The basis for growth of the geotargeted ad market is rooted in the economics of existing search resellers,” said Matt Booth, SVP and program director, Interactive Local Media, BIA/Kelsey, in a statement. “The effective strategy for companies like AT&T, ReachLocal, Yodle and others will be to use geotargeting to increase margins by shifting spend from paid search to geodisplay. Simply, if a lead from search costs $30, these companies will shift to display where similar quality leads can be obtained for less. The display ad networks have so much excess inventory; they will run whatever impressions are needed to meet reseller targets.”

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