Wednesday, February 18, 2009

Local Web-Ad Market Cools Down

Editor's Note: A tough year is ahead for web site advertising, which means the web is going to trim hiring. - MT
The Wall Street Journal - Local ads have accounted for some of the fastest growth in Internet advertising in recent years, as small businesses from car-repair shops in Dallas to bakeries in Charlotte, N.C., have taken their marketing online.

This year, growth in the local-ad market -- which represents about a third of total online ad spending in the U.S. -- is expected to shrink, according to one key estimate, challenging the ad and media-buying shops that rely on the local Internet market.

A number of start-ups, including ReachLocal, Yodle and Spot Runner, have cropped up in the past few years, raising millions of dollars and building technologies to help local businesses make the most of their Internet ad buys. Meanwhile, more-established local-media companies, from newspapers to Yellow Pages directories, have scurried to retrain their sales forces to sell online ads alongside their traditional products.

Now, local businesses are chopping their total ad spending amid the recession. While the local online-ad market remains one of the few relatively bright spots in the ad landscape, it probably will be tough for any one ad-space seller to reap much of the benefit.

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.

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