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Study: Paid Local Search Market to Triple in 2006

The paid local search advertising market will nearly triple to $907 million in 2006, according to research firm Borrell Associates.

In its annual study of the local online ad market, Borrell Associates also found that spending on local search will far outpace spending on local online display ads. Local search advertising is expected to reach $4.07 billion by 2010, accounting for nearly half of all local online advertising.

“Local search engine advertising is going to grow faster than national advertising,” said Kip Cassino, research director at Borrell Associates, Portsmouth, VA.

Cassino attributed this partly to recent efforts by Google, Yahoo and other search engines to build more “locally directed advertising.” But paid search is not the only category that will benefit from the local online ad growth.

Overall, local online ad spending will jump from $4.1 billion this year to a projected $5.7 billion in 2006, according to the report.

“Local online advertising is becoming more targeted, so every pair of eyes that looks at it is someone who really wants to do business with the advertiser,” Cassino said.

Though local search marketing is popular, more targeted forms of online advertising will outpace the growth of banner ads, pop-up ads and even paid listings in the local market by 2010, the company said.

“Advertising programs that show the greatest growth include a category we call 'direct online,' which is essentially e-mail advertising, but also includes direct messaging to wireless devices and local and national paid search,” the report said.

Though newspapers now account for 40 percent of the local online ad market, they need to broaden their classified vertical advertising to stay successful, Cassino said. Instead of upselling print advertisers to advertising also on their Web sites, newspapers need to encourage their online advertisers to buy ads in their print editions.

“Some of the most forward-thinking newspapers are already looking at that direction,” he said.

Christine Blank covers online marketing and advertising, including e-mail marketing and paid search, for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters

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