Local Digital Directional Advertising To Make $10.9 Billion By 2009

The Kelsey Group defines ‘directional media’ as advertising that is delivered to potential buyers when they are in the process of making a purchase or buying decision. ‘Digital directional media’ includes internet mechanisms such as Yellow Pages, local search and wireless directory search.

The Group has downgraded its global wireless directory search forecast from its previous outlook in 2003, to 7.5% ($400 million) of revenues. The future looks optimistic, however for local search which is predicted to account for 66% ($3.4 billion) of digital directional total ad revenues, while the internet Yellow Pages search is forecast to account for 25% ($1.3 billion) by 2009.

Commenting on the research, Neal Polachek, senior vice president at The Kelsey Group said: “In 2004 we witnessed considerable product development in local search by Google and Yahoo!. In 2005, we expect them to reap some benefits and we anticipate Microsoft, AOL, Ask Jeeves, FAST and several others will have strong entries into the market.”

Last month saw Yahoo! announce a 14% increase in profits year on year, stating that sales during the last three months of 2004, had amounted to $1,078 billion, a 62% rise on 2003, thus confirming Polachek’s optimism of the companies strength in the market (see Online Advertising Breaking Records). Yahoo! saw its net income rise to $373 million during quarter four last year, boosted by the sale of some shares in search engine Google.

The Kelsey Group also predicts that, by 2009, 63% of national companies will use digital directional advertising platforms to reach local markets and that small and medium-sized businesses will spend more than $1,9 billion, or 37% of total digital directional advertising expenditure, on the medium.

Forecasts from key industry prognosticators confirm the growing uptake of the internet as an advertising medium, with online advertising predicted to lead the way in advertising expenditure over the following year. A recent survey by Deutsche Bank and MediaPost predicts online adspend to rise by 30% in 2005 (see US Online Adspend To Increase By 30% In 2005).

Media research firm, Borrell Associates also see a strong 2005 for local online advertising, predicting the medium to hit $3.9 billion this year, enjoying more than twice the growth rate of overall internet advertising (see US Online Adspend To Reach $3.9 Billion In 2005).