In 2011, newspaper was the No. 1 medium in local ad sales, but online was the largest overall ad category by far ($59.1 billion).

In 2012, will the winner in local ad sales be online? The latest data from Borrell and Associates suggests that it could be, especially because online advertising is now the most frequently pitched type of advertising across the USA.

• There are 81,000 local advertising sellers in the USA.
• 24,000 are with newspapers.
• 16,929 are with radio.
• 15,531 sell directories.
• 7,280 are with TV and 6,200 with cable.
• 7,240 are with pure play digital.

Based on Borrell’s research, 1/4 of radio sellers are engaged in selling online ads. At the same time, over 3/4 of television sellers and 4/5 of newspaper sellers are engaged in selling online ads.


Source: Borrell and Associates, 2012. Click on image for a larger view.

So what can we expect in 2012 on the local interactive advertising front? First, a big picture look at 2011’s $240 billion advertising market. Approximately 38% of those dollars are spent by local media buyers.

• Newspaper earned more local dollars vs. national dollars by over a 2:1 ratio.
• Online earned more national dollars vs. local by 2.6:1.
• Radio earned more local dollars vs. national by over a 4:1 ratio.
• Local TV stations earned about the same dollars locally as they did nationally.
• However, cable TV stations earned more national dollars by a 3.5:1 ratio.
• Of course, network TV was 100% national.

In 2012, Borrell predicts that $18.5 billion will be spent in local online advertising across the USA—up from $15.7 billion in 2011 (18% growth rate). It’s estimated that $2 billion of this year’s earnings in local online ad dollars will be served via mobile. At the same time, it believes that “stationary online advertising” will decline by 76% between now and 2016.

For every dollar spent in online advertising, there are three dollars spent by local companies on “non-advertising.” That means that they are spending money on their web sites, online contesting or promotions, and couponing.

Consumers are getting their coupons more frequently online than they are through direct mail, in-store, or newspapers. Within the last year, online became the top source for consumer coupons. Does this indicate that consumers are no longer willing to even enter the store without confidence that there is a deal? It certainly indicates that retail has more to gain by engaging in social marketing such as Twitter and Facebook, e-mail marketing, and loyalty clubs.

In 2012, Borrell estimates that $15.6 billion will be spent by ad buyers in online discounts/deals and online couponing combined.

Paid search advertising, streaming video, targeted display ads, e-mail, and streaming audio are among some of the ad categories expected to blossom even further in 2012.

Borrell also makes some gutsy predictions about the future of local digital advertising. First, it predicts that by 2016, 88% of all local online advertising will be delivered on a mobile device. “The internet is becoming untethered, and people are consuming content on mobile devices,” said Borrell.

Good news for radio and TV if they seize this opportunity: Streaming video is expected to increase by 18% and streaming audio will increase by 129% this year.

Social is also looking up—big time. Out of 4,000 local advertisers, nearly 2/3 report that they do have a social network site or page, such as a Facebook page. When Borrell asked those advertisers what types of online advertising they anticipated purchasing in the next year, e-mail marketing was the most popular response (17% spending share), followed by search engine marketing (15% share), and social media marketing (13% share).

How do local, small and medium-sized businesses measure the success of social marketing programs they’ve tried? The No. 1 metric is new customers, followed by additional fans/friends/followers, and increased visits to business social networking pages.


Source: Borrell and Associates, 2012. Click on image for a larger view.

With so much market pressure on digital ad inventory, we’ll certainly see more innovation this year among companies that are looking to find an edge against their competitors. That “pull forward” on the industry can only be positive. It’s an opportunity for media to embrace new technology to deliver better targeted and more effective introductions between consumers and local businesses as they never could before.