Borrell: Local Online Revenue to Jump 50% in ’08

Local online revenue is expected to skyrocket this year, up 50 percent to $13.1 billion, according to a study released Thursday (May 29) by Borrell Associates.

Most of the growth is driven by pure-play companies and to a lesser extent, traditional local media companies ramping up ad sales on their own sites. More than half of the $13.1 billion revenue will go to pure-play local Web sites. Of the traditional media, newspapers are projected to bring in the most at $3.7 million, followed by TV stations at $1.2 billion, local yellow pages at $1.2 billion, and radio stations at $255 million.

According to Borrell, a transformation is taking place in local Web sites, which are taking on new identities rather than cloning the identity of the radio or TV station that is publishing them. “They are creating unique identities and breaking away from their print and broadcast roots,” the report said.

Local Web sites are also posing new threats to the Yellow Pages, with directories popping up everywhere.

For the next 18 months, Borrell expects local online advertising to continuing growing in the strong double-digits, and the moderating to single-digit “market norm” levels by 2012.

“By then we expect the ‘winners’ in local online advertising to have grown to the size of the second-or-third largest media outlets in their markets in terms of total revenues,” Borrell said. “Newspaper sites, with a formidable lead on everyone else, have the biggest head start.”