Online spending by local U.S. advertisers, which grew by 45% in 2008 to $12.7 billion, is expected to see growth fall to 5.4% in 2009, according to media-research firm Borrell Associates. Total U.S. online ad spending is expected to be about flat, declining 0.3% to $36.9 billion in 2009, compared with growth of 8.5% in 2008, Borrell says.
The startling part of that is number is the drop from 45% growth to 5.4% for local. That’s dramatic for sure. Of course, it is still growth which is a good thing especially considering the economy as a whole. According to the WSJ, local represents 1/3 of the total online ad spend so the impact of this slowdown is significant the online marketing industry as a whole.
The scramble is on for this shrinking piece of the local Internet marketing pie. Newspapers are desperately trying to hold on through their online presence. Yellow Page directories are attempting to retrain traditionally aggressive and often complacent sales forces to now sell their online offerings along side their traditional offerings. In addition, there are companies that specialize in optimizing local Internet ad spending like ReachLocal.
What should drive the continued growth, albeit slower growth, of local search is innovation. New product offerings from ReachLocal are designed to give local advertisers some of the advantages that are traditionally reserved for major marketers should help. Marchex is working to move into the mobile market. New York based Yodle is expanding its offerings and sales efforts backed by $10 million in VC.
It appears that for the foreseeable future the online advertising picture for all segments seems tempered at best. Even the mighty Internet is feeling the pinch but it’s not in the red just yet. Let’s celebrate that fact for now because there are a lot of people that would kill for growth of any kind.