Locally-sold targeted banner advertising is forecast to double next year, from $1.5 billion to $3.1 billion, according to [download page] a November report from Borrell Associates. Data from “Budgeting for 2012: Local Online Advertising Forecasts and Key Growth Opportunities” indicates that targeted display advertising will hold a 16.7% share of the local online ad market in 2012, up from 9.6% this year. Meanwhile, locally-sold streaming audio commercials are forecast to rise 129% from $264 million this year to $594 in 2012. According to Borrell insight, this growth will be attributable to the greater sophistication of placement and tracking software by radio stations and the entry of Pandora into the local ad-sales space.
Other categories pegged for growth are paid search, forecast to grow 10% to $6.2 billion, streaming video, set for an 18% rise to $2.8 billion, and email, projected to grow 9% to $683 million. The forecast calls for a decline in only 1 of the 6 formats tracked: run-of-site banner sales are expected to decline 3% to $5.1 billion, yet will still constitute 28% of all local online advertising.
According to a TVB survey conducted by Borrell and released earlier in November, local TV advertisers are almost three times as likely as local advertisers overall to use behavioral or targeted display ads (25% vs. 9%) and twice as likely to use banner and display ads (38% vs. 19%). 35% also use paid search, compared to 19% of local advertisers overall.
Mobile Advertising to Soar
According to the November paper, local mobile advertising will jump to $4.3 billion in 2012, representing a 66% increase from $2.6 billion this year. An additional $600 million is forecast to be spent on local online promotions, about triple the amount spent this year. By the end of 2012, Borrell expects mobile advertising to have more than doubled its share of all local online advertising, from 6.3% in 2011 to 14.1%.
Newspapers Retain Top Ad Share, For Now
Of the $89.5 billion Borrell expects to be spent on local advertising this year, online will total $15.7 billion, equaling a 17.5% share, only behind newspapers’ 22.7% share. However, while the 2012 forecast calls for growth of 5% in overall local advertising, online expenditures are forecast to grow at a much faster rate, expected to increase 18% to $18.5 billion. At that level, online would account for 19.7% of all local advertising and would be an estimated 1 year away from surpassing newspapers for the top share of local ad spend.
Traditional Media Dominates Ad Spend
According to the report, traditional media companies still control 92% of all local advertising, including more than half of all locally spent online advertising. Among traditional media sellers, newspapers take the top spot with a projected 24% share of locally spent online advertising, ahead of directories (13%) and broadcast TV (11.8%).
- Local online advertising is expected to grow between 11% and 23% next year in each of the 210 US markets. New York, NY is expected to grow 19.3% to $1.1 billion, while LA’s growth is forecast to be 21.2%, jumping from $774 million to $938 million.
- General merchandise stores, automotive, real estate, and recruitment represent roughly two-thirds of all locally spent online advertising. Tech-related businesses are expected to increase their online ad spending 56% from $156 million to $354 million.