Online advertising continues to make its presence felt, taking away from traditional media spend. A new report from Kelsey Group forecasts growth in traditional local advertising to be flat or negative in the next five years, while online adspend in the same media is expected to increase significantly.
According to Kelsey, local search, including online Yellow Pages, is expected to rise by 30.5% over the next five years, reaching $13 billion by 2010. Interactive classifieds are projected to grow by 7.9%, hitting $13 billion in 2010, up from $14.4 billion in 2005. In comparison, print yellow pages are forecast to increase by just 1.5% over the same time period.
Overall, the global print and digital directories market is expected to be valued at $41.3 billion, with online classifieds reaching $3.71 billion. Elsewhere, European online classifieds are projected to be worth around $10.3 billion by 2010.
Commenting on the predictions, Greg Sterling, Kelsey Group analyst said: “The traditional products, the newspaper classified, and print Yellow Pages are going to see flat or negative growth, and negative growth in the case of classifieds.”
“We’re going to see a trend towards more performance media, where value is proven and self-evident to the advertiser, and that’s the influence of internet on traditional marketing.”
Kelsey also expects very high annual growth for pay-per-call, projecting the media to rise at 130% annually, reaching $3.7 billion in 2010, up from $57 million in 2005.
Sterling asserted that traditional publishers could protect their revenue streams by embracing the trend towards online and performance-based advertising.
The analyst explained: “There’s some defensive and offensive measures that newspapers can take to retain advertisers. These include, bundling their products online and off, adding free listings with some kind of up-sales and performance-based products as opposed to the flat-fee products.”
Online’s strong growth is confirmed in a number of industry studies, with a recent survey from Outsell predicting search engine advertising expenditure to rise by 26% in 2006, resulting in total online marketing spend growing by 19% in 2006 (see Search Engine Adspend To Rise By 26% In 2006).
Elsewhere, paid search is also expected to enjoy a healthy 2006, with a recent report from Piper Jaffray predicting the medium to generate more than $14 billion globally over the coming year, enjoying an increase of 41% from the estimated $10 billion that it made in 2005 (see Paid Search To Reach $14 Billion Worldwide In 2006).
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