The trough will get even deeper in 2010 as local online advertising continues to slow and as a bevy of new competitors rush in to become purveyors of hyperlocal everything. PBS, ESPN, AOL, Huffington Post, The Knot, Microsoft, Yahoo and scores of others have announced plans to reach deep into local ad sales. While they missed this crest, there is plenty of money yet to be made in local online ad sales.

Meanwhile, the next waves are forming on the horizon, as they always do, and companies that know what to look for can begin moving to catch them. Online promotions and mobile advertising are two such waves. This 2010 Outlook offers observations and forecasts intended to help that process.

Local online advertising will hit $14.2 billion this year, 12 percent more than 2008. For 2010 we are forecasting that it will grow just 5 percent, to $14.9 billion. In the past five years, local online advertising grew at a compound annual growth rate of 46.5 percent. For the next  five, we are expecting that rate to be 2.9 percent. The forecast is predicated upon a slow economic recovery and the fact that “online” as a local media advertising category is approaching what we believe is saturation. Online media buys currently hold a 13.8 percent share of all local advertising. We believe it will peak at a 16 percent share by 2013.

Unfortunately, one of the hottest growth categories – mobile – is not likely to play a significant role on the local media landscape next year. We are estimating that local buys will comprise only 20 percent of all mobile advertising, totaling slightly more than $500 million in 2010. Still, mobile is a category worth watching as the audience grows and as couponing, mobile directory advertising and sponsored text messages find viable applications for local marketers.

The game in 2010 will center more around stealing market share than growing the market. Local advertisers have had plenty of time to assess the effectiveness of banner ads, search, streaming video and e-mail advertising peddled to them over the past decade. They will abandon programs that just do not work, and embrace those that produce measurable results. They are also likely to continue following a few years behind the spending patterns of national advertisers by expanding their use of online promotions, which give them more direct access to their customers and prospects – without having to rely as heavily on media companies to help reach them.

Study provided by Borrell Associates. For more information and to download data samples visit www.borrellassociates.com

Minds Over Media provides full-service online marketing services including web design Denver, SEO Denver, video production Denver, social media marketing Denver, blog design Denver, graphic design Denver, and other digital media services.