Borrell is predicting that local online advertising spend will only grow by 6% in 2010.
Last year according to Borrell local Web spending grew by 46% over 2008:
The growth was due mainly to smaller local businesses being forced to adjust their marketing dials for a more efficient advertising mix,” according to Borrell. “Many of them continued to trim their newspaper, Yellow Pages and direct mail advertising while pushing more of their money toward less-expensive Web advertising.
So why is 2010 going to be such a relative dog compared to 2009, when the country was in the midst of starting to recover from a collective national freakout?
From where I sit I don’t see any pullback from those smaller businesses who were forced online. If anything those who got in last year are probably a bit smarter about using the medium now and will likely turn on the jets. And based on my in-box along with what I hear from just about everyone else in the search/social marketing side of the business, the demand is only increasing.
And so for this timid projection I dub Borrell Associates “Crack Smoker of the MonthTM”
18 Response Comments
I will be honest with you here. The Yellow Pages and various local directories have made in roads in the search Marketing area with good results based on selling Google Adwords to Small business owners who don’t want too or have time to deal with SEO and PPC campaigns. I think the biggest problem we have is that traditional print based companies are trying to replicate there conventional offline business models online with some with success from large directories like yellow pages wo are hiring and training people on Google Adwords with little regard for SEO and off-page tactics. This in my opinion is what is causing confusion and frustration for SEO firms in smaller cities and their clients.
In SEO we are trained to create a cohesive plan for our clients that includes local Search, SEO, Video SEO, Search Marketing, Social Media Marketing and other areas of online promotion.
Directories are another marketing competitor that is being added to the mix that is making it harder for the local SEO to survive.
Kinda like when Walmart comes to down and you are running a small boutique.
Nice touch with the “TM.”
The fact is, most smaller local businesses have yet to “jump in” to local online advertising. We are merely at the onset of a dramatic shift to local online advertising.
The article makes absolutely no sense because it goes on to state that legacy media companies are turning the corner with their local online advertising products, even adding “internet only” sales reps. That can only signal tremendous growth.
I agree, Andrew. Somebody needs to put down the pipe!
Chief crackhead here. Our estimate is an opinion based on a very large amount of historical trending, mathematical equations, and a deep knowledge of how local advertisers work. In the end, of course, it’s just an opinion. The big difference is that ours comes from people who live and breathe trending analysis, while yours is based on…well, apparently reading your email in-box. That’s a pretty small sample, though I wouldn’t dare suggest that you were a crack smoker or perhaps just a knucklehead.
Here’s the thing….You’re doing SEO, right? That’s not advertising. That’s a technical task that falls under “marketing” but not “advertising. Purchasing search words, on the other hand, is indeed advertising. And here’s another bit of information you might be interested in knowing: The amount spent on non-advertising marketing is TWICE that of advertising, and it’s rising rapidly.
Unfortunately, “online” is reaching its peak. There are 11 other forms of media competing with online, and even though you’re immeresed and apparently enamored of its abilities, other media work better for branding and general awareness marketing.
Online advertising has been growing for 15 years. It can’t grow forever. It’s reaching a saturation point and will soon level off and stop growing altogether. We are very close to that point. The new disruptor has already emerged and is likely to cap off much of “online” growth this year or next. It’s mobile advertising.
I could offer a lot more information and explanation, but I’ve got to run. Crack pipe’s a-callin……
Good sport, Gordon–I look forward to meeting you at an industry event. You are saying that online advertising by local advertisers is going to increase to $13.4 billion in 2010 from $12.6 billion in 2009.
I dispute the paltry estimate of growth for a handful of reasons, including the collective psyche of local businesses that drive the US economy. Many local businesses have loosened up their budgets in 2010 after spending the last year and a half in fear of a free-falling economy. They understand that the current administration is not business-friendly and a recovery will take years to unfold but they know they have to compete, and what better, more economical way than local online advertising.
I work with a handful of well-known brands, including a couple fortune 100 companies, and several hundred SMB’s in almost every state of our union. On average, roughly 80% of the local online advertising budgets we manage go to AdWords, Yahoo Search Marketing, and adCenter. Most of our clients are consistently increasing their local online advertising budgets. The ROI from the “legacy media” online advertising offerings have generally been a joke. Burn and churn.
The fact is, the vast majority of SMB’s have yet to discover or adopt online advertising.
Local is the fastest growing segment of online advertising. There is no question about that. My interactions with SMB’s and everything I know about this industry tells me we are at the infancy of a dramatic shift to local online advertising (which includes mobile) by SMB’s.
The problem I have with the article is that it doesn’t make any sense. It cites how the online hybrids of legacy media companies experienced wonderful growth last year but for some reason it is going to stall and fall flat in 2010. Then why, as the article states, are some of these legacy media hybrids starting to hire “internet only” sales representatives? Because local online advertising is not growing?
“The fact is, the vast majority of SMB’s have yet to discover or adopt online advertising.”
And the fact of the matter is most won’t. Ever.
At least not in the way most people talk about local online advertising.
OK I am going to give Gordon some credit here. My initial reaction to Borrell’s prediction was not so much about online advertising spending as it was to online marketing spending. And to Gordon’s point I haven’t spent a lot of time amassing statistically significant data. That said, amongst a sample of search engine marketers where the n>30 I have definitely heard of an increase in activity by SMBs, and not just on SEO & Social, but on actual ads.
And while there’s a difference between “local” and “national” advertising it is certainly interesting to see that online advertising was up 15% in Q1 according to this article in TechCrunch.
Anyhow I appreciate the effort that Borrell is going through to try and make sense of this stuff for us all, and in face I may be exhibiting some local search bias here, but I still think it’s going to be a big year for local.
If anything I would say that the 60 or 70 percent of all the businesses didn’t do this at all and continued spending it on those mediums that continue to not work and it’ll be our jobs to get them to spend last year’s 46% and this year’s 9% more on online marketing.
They’ll be spending it catching up this year. Thanks as always for your insights
River City IM
Just one more thing and I’ll shut up. Stephanie Hobbs’ article on SEL stated the following:
“The number of online offerings available for local advertising is growing rapidly as consumers increasingly turn to digital tools for local search.”
That is the insight of a YPA executive. If consumers are increasingly turning to digital tools for local search, then you can bet the farm that businesses are following with reciprocal growth in local online advertising.
Hmmm. Let’s follow the logic by subbing out the word “online advertising” with another commodity, restaurants. So you get, “The number of restaurants available is growing rapidly as consumers increasingly turn to dining out.” Now, as a businessman, that would prompt me to stay away from the restaurant business or brace for an inevitable downturn. Too many people rushing for one thing, and too many businesses rushing to meet them, creates a volatile marketplace. If anybody has a farm, I’d be happy to take bets. Unless it’s a lima bean farm. (I hate limas.)
Whoa, whoa, whoa. Gordon, are you saying I’m in the wrong business?
Actually, Gordon ,there was a time when restaurants were a novelty. But one thing is for sure. Restaurants are not necessary to the survival of a small business, but for many small businesses, local advertising is. Would you believe that our local online advertising budgets are growing?
“Better Ingredients. Better Pizza.”
Ok first I’d like to welcome The Papa to the conversation. Nice to know he is keeping up on his local seo (although Papa you may want to get your guys working on your restaurant locator – the SEO there is akin to a pizza with cheese that’s a few weeks past its prime).
As for Gordon’s restaurant analogy I’ll have to take a shot at that one simply because, well it’s a blog and isn’t splitting hairs what we are supposed to do here?
So if everyone thought they were rich because the equity in their homes had quintupled thanks to shaky financial tricks and one of the byproducts was that people went out to eat a lot more often, I would say that expanding your restaurant biz might be unwise based on Gordon’s sooner-or-later-the-bubble-will-burst theory. But if we are talking about a nascent market where there are still huge inefficiencies, ongoing innovation and penetration is still relatively small – and if we are coming out of a period where many SMBs “kept their powder dry” and we still saw 46% growth, I think we are talking about a different situation altogether. It’s not even apples and oranges. It’s more like going out to eat v. ingesting food through mental telepathy, or something like that.
I don’t know if I would be willing to bet the farm, but I would be willing to bet that the farmer ups his online marketing budget 🙂
Your right it makes no sense the numbers should go up since where recovering slowly, but I doubt there on crack lol
I agree with you, the success of every online business depends on how you market it. That is why the demand of SEO is increasing.
I disagree with your statement that online advertising is hitting it’s peak, in fact, that’s an almost laughable statement. That’s roughly like saying 30 years ago that the automobile, television, and any electronic device for that matter was a fad and hitting it’s peak.
The PC came out main steam (sort of) when I was in grade 5 and which the Apple with the amber screen (or was it green?) and weighed 200 pounds. For many years I recall all adults laughing it off as a craze and that it could never replace people. I wonder who’s laughing now? IBM, Microsoft and many others.
You really think 15 years of growth for online advertising is anything significant? Back then, websites were still being sold to local business owners as the “Must Have” only to be many years premature before they could really benefit local businesses. It’s only recent that local online advertising/Marketing has been taking form.
Here’s another statement that you can [almost] laugh at: TV DID reach its peak about 30 years ago. (Please note that this discussion is about advertising, not the sale of automobiles or electronic devices. Unlike expenditures on TVs, cars or PCs, the amount that businesses as a whole spend on rarely increases, regardless of how many additional choices they have.)
Every new medium grows like crazy for 15 to 20 years, then levels out. I can send you the chart if you’d like to see how that happened to radio around 1950, then TV around 1975, then cable (sort of) around 2000, then “online” in 2010. They all peaked when another disruptor emerged.
The disruptor for online advertusubg has indeed emerged, causing it to begin leveling. It’s mobile advertising, which we forecast to shoot skyward over the next 10 years.
None of this should depress or scare anyone who makes their living from the field of online advertising. There’s a lot of movement and refinement within the online world — like shrinkage in banners and keyword buys and growth in online video and email advertising. And of course mobile advertising more or less sucks a lof of content and accompanying advertising from the Web, so while “online” may eventually look like its shrinking it’s actually being accounted for in another bucket called mobile.
Thanks for stopping by again Gordon! Curious if you have any update on how the year is going to net out re local online ad spend. Which one of us is going to be crowned cracksmoker of the year? 🙂
I think it’s definitely true! Th impact of the crisis is not necessarily a negative one. The smart people know how to take advantage of the situation and do well no matter what the conditions are.
Everything going south in the “real” world? Switch to online media! Traditional advertising not working? Switch to SEO based publicity.
Anyways, thanks for the article. Hopefully we’ll all do better soon 🙂
Final analysis: Local Online went from $13.3b in 2009 to $13.5b in 2010, which comes to about 1.5% growth. Due more to lots of operations collapsing altogether, and a lot of price compression. It’s difficult to issue reports that people in the industry deem “negative” or just plain wrong against what they’re seeing….but we’re not an industry shill. We just survey, survey, survey and tally, tally, tally…and then report. Then, of course, we smoke crack, but only to ease the anxiety from having to dodge from messenger-shooters.