Borrell Associates, a long-time observer of local advertising markets, released their annual survey of media companies and had some provocative conclusions
to their research. Inman News did a comprehensive piece on the study.
While local online ad spending is expected to grow much more slowly this year, in a striking turnabout, “legacy” media companies should increase their market share versus Internet pure-play businesses.
First, the forecast:
Local advertisers are expected to increase their online ad spending by just 6 percent this year, a sharp pullback from growth of 46 percent in 2008, Borrell Associates Inc. said in an annual survey of media companies.
Borrell is forecasting a rebound in 2010, with growth of 13 percent, and said quicker improvement in the economy could lead to more growth than currently forecast for this year. The long-term forecast calls for local online ad spending to peak at $15.9 billion in 2011 before contracting the following two years to $15.3 billion.
Traditional media business are leveraging their local sales organizations to grow Internet revenues more quickly than their pure-play competitors, Borrell says.
While pure-play Internet companies claimed 47.6 percent of local advertising revenue in 2008, that’s down from 49.7 percent in 2007 — the first time legacy media companies have taken back market share since Borrell began tracking local shares in 2001.Legacy media companies may have “finally turned their aircraft carriers,” the report said, thanks in large part to a sales force of 98,000 workers who can cross-sell online ads to local advertisers they have existing relationships with.
The report cites our brand, The Real Estate Book, as an example of that shift.
One magazine, The Real Estate Book, managed to grow online revenue by 11 percent in 2008, but still generated 94.5 percent of revenue offline, the report said.
One observation: the online revenue attributed to The Real Estate Book is from online upgrades to our integrated marketing package. When we think about the value of Internet distribution to our business, we measure the impact that the Internet distribution (which is included in our base advertising price) has on lead generation. Typically, phone calls and e-mail leads from the Internet account for about 1/3 of the total business activity generated on behalf of the advertiser.
So, when I think of what percentage of my business I can attribute to the Internet, it’s actually more like 30%.
Note: The Borrell report is directionally consistent with the local advertising forecast from The Kelsey Group, which I wrote about here.
