Borrell Says Online Advertising Is Slowing
October 9, 2009 at 4:24 AM (PT)
While online advertising will increase 5% to $14.9 billion next year, it's viewed with some negativism according to a new report from BORRELL ASSOCIATES as that growth rate would be less than half the 12% gain (to $14.2 billion) that the local media research firm projects this year. BORRELL also said the lower returns reflect a local online ad category rapidly approaching "saturation."
The report forcasts the 13.8% share that online makes up of all local advertising will peak at 16% by 2013, reports MEDIAPOST.COM. BORRELL predicts local Web advertising will post just 2.9% growth rate over the next five years.
"The game in 2010 will center more around stealing market share than growing the market. Local advertisers have had plenty of time to assess the effectiveness of banner ads, search, streaming video and e-mail advertising peddled to them over the past decade," writes BORRELL "They will abandon programs that just do not work, and embrace those that produce measurable results."
MEDIAPOST notes "competition will be further heightened in the contracting online market as a host of new and existing competitors jump in, offering hyperlocal services. They include NATIONAL PUBLIC RADIO, which has received $3 million this month to start a hyperlocal news operation, and AOL, which acquired community news provider PATCH.COM this year for $7 million, with plans to roll it out to localities nationwide."
In MAY (NET NEWS 5/4), BORRELL ASSOCIATES' 2008 "What Local Media Web Sites Earn" survey reports that radio station websites showed a 16.4% local revenue increase to $220 million. The report sees revenues growing 26% in 2009 to $277 million, a substantial increase, but still well behind the revenue earned by television, newspaper and YELLOW PAGES websites, which the report notes have moved beyond radio's focus on selling banner ads and spots in streaming audio.