Friday, December 30, 2011 | Edited by Daniel Moores

In Local Media, the War Over Turf Turns Spending on local online advertising is poised to soar once again in 2012 after a brief slowdown during the recession. Local web ad revenue will hit $18.5 billion next year, according to a new forecast from Borrell Associates, the Williamsburg, Va.-based local advertising tracker, up from $15.7 billion this year. Online will account for more than a fifth of all local advertising, second only to newspapers, and by 2013 the Internet will surpass papers to become No. 1 in local ad revenue. That comes just two years after local web advertising hit a major slowdown, growing just 1 percent year over year in 2010. There will be several things driving this revival, including interest in mobile advertising, which is included in web estimates, and small businesses' desire to become active in social media advertising. Pete Conti, executive vice president at Borrell Associates, talks to Media Life about traditional media companies' rising share in online advertising, how the adoption of mobile surfing is like the transition from VCRs to DVD players, and which local market has surpassed $1 billion in online ad spending. What's the most interesting or most important thing in this report? Newspapers and TV are gaining on local online ad share. Traditional media companies still control 92 percent of all local advertising, including more than half of all locally spent online advertising. We expect that share to actually increase in 2012 as traditional media companies continue to team up with big pureplay companies like Yahoo, Google, Microsoft and others. What's the significance of New York City passing the $1 billion mark in local online spending? Where is most of that spending going to? Will any other markets near that point in the near future? Just a milestone. The strength in ad spend is spread across all markets, even the smaller ones. You compare the transition from traditional PCs to mobile devices to that of the move from VCRs to DVRs. Will this transition be faster or slower? Are local advertisers prepared for this? If not, what do they need to keep in mind? Faster, the whole rate of transition is compressed. It is like Moore's law except for new media. Please define "traditional local media companies." Why have they been so successful at holding such a large share of local ad dollars, and what impact are they having on Internet pure-plays? Traditional would be newspapers, yellow pages, TV and radio. The difference is a trusted brand in the market and that they have so many feet on the street. Why will "run-of-site" banner ads decline while targeted ones increase? SMBs expect better targeting, and they hear about it being used at the national level, and they expect this level of sophisticated advertising at the local level. No more shotgun advertising! (A scattered approach where money is spent indiscriminately and a lot of it goes to waste.) What other online ad categories will see local growth and why? How does this compare to national? Other categories pegged for growth are paid search, up 10 percent in 2012, email, up 9 percent, and streaming video, up 18 percent. The changes in local video and paid search advertising may be deceiving. Looking out to five years, we are forecasting local paid search to decline 25 percent as advertisers migrate away from paid listings and search engine advertising in favor of search optimization and targeted and sexier rich-media advertising. What role will social media play in local online growth? What are some examples of local social media advertising? Part of the growth is built around the excitement in social media. Social media platforms are growing at a quick rate, and more SMBs are interested in leveraging this kind of one-on-one communication. They understand the value of word-of-mouth, and the lesser expense involved helps. We've seen a few other forecasts that predict that local advertising will be down this year. Why do you expect it to grow, and how is it holding up against some of the overall bad economic news of the past few months? The growth in 2012 accelerates a bit from the current year's growth rate of 15.4 percent due to three things: the excitement around mobile devices, high interest in social media, and a very mild rebound in the economy -- which may not happen at all but consumer confidence is on the rebound at the moment. What's the most under-reported story in local advertising right now and why? SMBs indicate that they want to try more mobile and social advertising in the coming year. What's the most important thing media buyers and planners should keep an eye on? Why? Wide-scale reorganization of digital units within local media companies; skyrocketing demand for online video advertising, mobile and social; partnering with pure-play companies. (Source: Diego Vasquez, Media Life, 11/17/11)