Online advertising has gained new energy and it two years away from toppling newspapers as the age-old kingpin of local advertising. Forecasts call for 18% growth in local online advertising in 2012 as expenditures go from an estimated $15.7 billion this year to $18.5 billion next year.
In 2012, for the first time, one market will surpass the $1 billion milestone in terms of how much local businesses are spending on online media to reach local consumers. (It’s New York City.) Of all 210 US markets, only 1 in 10 will see less than $10 million in online spending by local businesses.
This continued uptick sets the stage for a dose of internal drama for digital media, which suddenly finds itself facing its own disruptor. While traditional desktop-based web advertising continues to grow in 2012, so does mobile media. By 2013 the proliferation of mobile devices — combined with local advertisers’ budding affair with mobile couponing, text messages, social media and apps — is likely to cause a precipitous decline in ads served up on desktop computers. Forecasts call for 88% of all local online advertising will be viewed on tablets, smartphones or GPS enabled laptops by 2016.
Who’s winning the race for Main Street’s marketing dollars? It may be hard to believe, but it’s traditional local media companies. They already control 92% of all local ad dollars — including half of all locally spent online advertising. For the past two years, traditional media companies have been quietly staffing up their online sales forces, stealing share from Internet pureplay companies. That trend is expected to continue in 2012 as pureplay companies lose 1.6 points of share while local TV stations gain 1.6 points, radio 1 point and newspapers 0.8 of a point.
In terms of online ad formats, the big story is in sales of static banner advertising, sold on the basis of “eyeballs.” Run-of-site banner sales are forecast to decline 3% next year while sales of targeted banner advertising more than doubles. Increase are also forecast for paid search (up 10%), streaming video (up 18%), email (up 9%) and streaming audio (up 129%).