NEW YORK Following five years of double-digit growth, local online advertising will moderate next year, growing only 5 percent to $14.9 billion, according to a new forecast from Borrell Associates.
This year, local online advertising is expected to grow 12 percent to $14.2 billion, with most of that growth expected in the second half.
Over the past five years, local online advertising grew at a compound annual rate of 46.5 percent. For the next five years, Borrell is expecting local online advertising to grow at a rate of 2.9 percent. Local online advertising will peak in 2013 at $16.4 billion.
“The local media advertising category is approaching what we believe is saturation,” the Borrell report said. “The game in 2010 will center more around stealing market share than growing the market.”
Next year’s market will be driven by demand for paid search and online directory advertising, while banner sales decline 10 percent. Streaming video, audio advertising and e-mail promotions will grow, but still make up a smaller segment of total ad spending.
One of the hottest growth categories, mobile, is not likely to have a significant impact on the local media landscape. Borrell projects that local buys will comprise only 15 percent of all mobile advertising, totaling $500 million in 2010. Local mobile advertising in 2010 will break out as follows: SMS/MMS, $311 million; search and display, $119 million; video, $56 million; coupons, $19 million; and in-game/applications, $4 million.
Overall, mobile advertising will reach $1.9 billion in 2009 and grow 33 percent in 2010 to $2.6 billion, dominated by SMS/MMS, followed by search, display and video advertising. Coupon and other proximity-based advertising still remains a small piece of mobile, but will continue to grow.