Local Online Ads Will Reach $12.6 Billion In 2008, Local Search Will Bring In $5 Billion Of That Total

Using an expansive definition of the marketplace, Borrell Associates says that “local online advertising” is worth $8.5 billion today. That number consists of local search, “local banners,” and local video. Banners is the biggest spending category and video the smallest. But Borrell expects local search to grow substantially to become almost 50% of the total local online spend next year, which is projected to reach $12.6 billion.

Local search is expected to grow from roughly $2.5 billion currently to $5 billion in 2008. Borrell expects local video to roughly triple from just over $400 million today to $1.27 million next year.

Borrell says “The Big Three” classified categories (jobs, cars, real estate) will have a 37.7 percent share of all online ad spending in 2008.

A few verbatim highlights from the report:

Next year will be a perplexing one for local media companies trying to tackle the Web. Most yellow pages publishers, cable companies, newspapers, radio stations and TV stations are still pinning their hopes on their traditional sales reps being able sell online ad packages. But there is increasing evidence to support the idea that a greater investment in an independent online sales force will be necessary to continue the growth these properties have enjoyed for the past few years.

The main agents behind this relentless growth are the popularity of search engine and online directory advertising and, to a lesser extent, the growing popularity of low-cost video commercials. We forecast local search to more than double next year to just over $5 billion and local online video advertising to more than triple to nearly $1.3 billion.

This trend is leading to a sort of Pac-Man effect in which the pure-play companies are getting a bigger and bigger slice of that $8.5 billion pie. Pure-plays currently hold a 43.7 percent share, compared with the newspapers’ 33.4 percent share. Three years ago, newspapers had the largest share at 44.1 percent and local yellow pages publishers had 18.4 percent.

The local business categories, according to Borrell Associates, that have the highest online penetration rates as a percentage of total ad spend are:

  • Recruitment

  • Real estate
  • Computer-related services
  • DotCom Businesses (this is a problematic category)
  • Auto marketing
  • Miscellaneous retail

Borrell uses a total market of 11.5 million “business locations” and says the average spend was $299 “per location” in 2007. The range is just over $18,000 at the high end to just under $100 at the low end.

Related Topics: Channel: Local | Search Marketing: Local Search Marketing | Stats: General


About The Author: is a Contributing Editor at Search Engine Land. He writes a personal blog Screenwerk, about SoLoMo issues and connecting the dots between online and offline. He also posts at Internet2Go, which is focused on the mobile Internet. Follow him @gsterling.

Connect with the author via: Email | Twitter | Google+ | LinkedIn


Get all the top search stories emailed daily!  


Other ways to share:

Read before commenting! We welcome constructive comments and allow any that meet our common sense criteria. This means being respectful and polite to others. It means providing helpful information that contributes to a story or discussion. It means leaving links only that substantially add further to a discussion. Comments using foul language, being disrespectful to others or otherwise violating what we believe are common sense standards of discussion will be deleted. Comments may also be removed if they are posted from anonymous accounts. You can read more about our comments policy here.

Comments are closed.

Get Our News, Everywhere!

Daily Email:

Follow Search Engine Land on Twitter @sengineland Like Search Engine Land on Facebook Follow Search Engine Land on Google+ Get the Search Engine Land Feed Connect with Search Engine Land on LinkedIn Check out our Tumblr! See us on Pinterest


Click to watch SMX conference video

Join us at one of our SMX or MarTech events:

United States


Australia & China

Learn more about: SMX | MarTech

Free Daily Search News Recap!

SearchCap is a once-per-day newsletter update - sign up below and get the news delivered to you!



Search Engine Land Periodic Table of SEO Success Factors

Get Your Copy
Read The Full SEO Guide