Exclusive: Benchmarking Local Online Media Report

Borrell: Local Web Ad Rev To Rise 21% In '12

Local online advertising revenue is expected to grow 21% in 2012 and could soon push past newspapers if it continues its growth spurt through 2013, according to Borrell Associates' new Benchmarking Local Online Media: 2011 Revenue Survey due out Tuesday.

Local online advertising is expected to grow 21.3% in 2012, to reach around $20 billion, according to a new Borrell Associates report to be released Tuesday. That’s on top of 20.6% growth in 2011. Borrell also predicted that local online could surpass newspapers as soon as next year.

“If the digital growth spurt continues through 2013, online media will hold the largest share of local advertising, toppling newspapers for the first time in history,” Borrell CEO Gordon Borrell wrote in the Benchmarking Local Online Media: 2011 Revenue Survey.

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The report also found that commerce-related sites made up 12 of the top 15 online media companies in 2011. The commerce-focused pureplays continue to dominate the local online ad scene, with a 46% share of the market according to Borrell. Newspapers are a distant second at 25%.

Newspapers are expected to generate $4.8 billion in local online ad revenue in 2012, Borrell said. While the industry trend seems to be toward paywalls, Borrell wrote that the average newspaper generates about 55% of its revenue from content that is not likely to be put behind a paywall: including classifieds (41.4% in revenue in 2011), help wanteds (19.8%), automotive ads (15.7%) and real estate (5.9%).

Though some of the large newspaper publishers struggled to bring in local online ad revenue in 2011 —online revenue at Scripps Newspapers and The Washington Post Co. were down 8%, while Media General was down 7% — the news wasn’t all grim for the industry. Gannett was up 9%, and many smaller newspaper companies saw 15%-20% growth last year.

The average newspaper site also made nearly $2.2 million online last year, outpacing the average TV station’s take of $858,000, according to the report. Borrell expects TV to continue to see healthy growth with more people turning to station sites to watch video. Radio sites lagged far behind, with an average of $445,000 in Web revenue.

Brand Connections

Leading the local ad revenue charge on the pureplay side in 2011 was Autotrader.com. The car marketplace generated over $1 billion last year, according to the report. The flagging yellow pages industry, which is watching its print directory business dry up, also made a good showing online. AT&TYellowpages.com, made nearly $1 billion in 2011, while Canada’s Yellow Media and Yellowbook were also among the top 10 online media companies.

Borrell Associates reviewed digital ad revenue from more than 5,700 media companies to compile its report.


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