Local Search to Approach $1 Billion in 2006

In a new Borrell Associates report entitled “2006 Local Search Advertising,” Borrell projects that the local paid-search market will reach $987 million this year, which is more than double the $418 million it earned in 2005. This figure is expected to grow even more to $1.7 billion in 2007, and is anticipated to reach $4 billion by 2010, which is when Borrell expects the market to be 47% of local online advertising.

On the other hand, local advertisers are expected to lessen their spending on online display ads and listings by 2010. They are projected to spend $5.7 billion in 2008, decreasing that amount in 2010 to $4.5 billion.

The report indicates that local advertisers are through with experimentation, and are ready to take a strong stand. They purchased only 5.6% of sponsored links on the major search engines about a year and a half ago, but they are now buying about 36% of these types of ads.

The study conducted by Borrell tracked over 2,000 online search ads on Google and Yahoo and accumulated projections of 400 ad pundits. Out of this panel of experts, more than 60% of them see search engines progressing towards the yellow pages model within the next two years. This would be a portent of the end of the print form of the yellow pages in many big markets in the U.S.

Along with this prediction, the vast majority of the panel agreed on the prediction that within the next five years, yellow pages books will develop into listings of local site addresses. According to the report, “eighty-five percent of respondents think this will happen within five years.”

Real estate and mortgage agents are leading the charge. They have become leaders in terms of spending on local Web advertising. Search ads for local agents were only 17.5% of local search ads 18 months ago, but are now about 50% of listings on keyword searches in 10 different cities.

The Borrell report also suggests that there is a real possibility that a local search engine could emerge in the next five years to dominate the local search market, usurping national search engines such as Google, Yahoo, and MSN. Local search engines could very well meet specific market needs in a way that the big search engines might not be able to, which would give them a leg up on the market.

Sources:

http://www.clickz.com/news/article.php/3590591

http://www.marketingvox.com/archives/2006/03/
10/local_search_advertising_market_to_more_than
_double_in_2006/index.php