By Heidi Dawley
Mar 23, 2009
In recent years, local web advertising has grown at a remarkable pace, at times by 50 percent or more a year, much of that streaming in from large local businesses. But with the recession have come sharp cutbacks, and local media sellers are having to look elsewhere.
Where they are looking is at medium-size and small local businesses, and it's a pretty enticing market.
Though once slow to go online, mid-size and small businesses are now rushing on. Because of its far lower cost, the web offers them a shot at competing with larger players as they never could before.
There are 14.6 million small- to medium-sized businesses (SMBs) in the U.S., and they spent more than $6.9 billion on local online advertising in 2008, accounting for nearly 57 percent of local online advertising, which totaled about $13.1 billion.
But selling to SMBs presents not a few challenges, says Gordon Borrell of Borrell Associates, which has a new report out on the sector.
“The point is that for everybody’s desire to get to those SMBs because they appear to be a pot of gold, it is a heck of a lot more complicated than that. It will require thought and stamina to corral them in a way that will provide sustainable income for a media company,” he says.
One reason media sellers have not focused on SMBs in the past is because it is difficult to deal with them. The transactions, while small, require the same amount of effort as closing far bigger sales.
There is also the sheer number of such businesses. “It’s not like you are looking at a two-thousand pound gorilla. It’s more like 4,000 one-pound monkeys,” says Kip Cassino, vice president, research at Borrell.
But media sellers have little choice but to tackle the sector. Total interactive spending--advertising and non-advertising spending--is forecast to rise 23.6 percent by 2013, to $9.1 billion.
Non-advertising interactive spending, the money companies plough into their sites, is expected to increase by183.3 percent, from $584 million in 2008 to $1.653 billion in 2013.
What companies allocate for online advertising will rise to $7.5 billion by 2013, up from $6.9 billion in 2008, an increase of 7.9 percent.
While that might not sound earth shattering, it is a figure that is dragged down by one particular format. The amount SMBs spend on standard-format interactive ads, such as banner ads, is predicted to fall 62.3 percent, from $3.7 billion in 2008 to just $1.4 billion in 2013.
Stripping that out, SMB local online spending nearly doubles by 2013. SMB spending on email marketing is forecast to increase $939.6 million, up 139.9 percent.
Borrell predicts that SMB spending on paid search will increase by 34.9 percent to hit $3 billion and spending on streaming audio and visual will increase 274.6 percent to hit $563.2 million.
Mar 23, 2009
In recent years, local web advertising has grown at a remarkable pace, at times by 50 percent or more a year, much of that streaming in from large local businesses. But with the recession have come sharp cutbacks, and local media sellers are having to look elsewhere.
Where they are looking is at medium-size and small local businesses, and it's a pretty enticing market.
Though once slow to go online, mid-size and small businesses are now rushing on. Because of its far lower cost, the web offers them a shot at competing with larger players as they never could before.
There are 14.6 million small- to medium-sized businesses (SMBs) in the U.S., and they spent more than $6.9 billion on local online advertising in 2008, accounting for nearly 57 percent of local online advertising, which totaled about $13.1 billion.
But selling to SMBs presents not a few challenges, says Gordon Borrell of Borrell Associates, which has a new report out on the sector.
“The point is that for everybody’s desire to get to those SMBs because they appear to be a pot of gold, it is a heck of a lot more complicated than that. It will require thought and stamina to corral them in a way that will provide sustainable income for a media company,” he says.
One reason media sellers have not focused on SMBs in the past is because it is difficult to deal with them. The transactions, while small, require the same amount of effort as closing far bigger sales.
There is also the sheer number of such businesses. “It’s not like you are looking at a two-thousand pound gorilla. It’s more like 4,000 one-pound monkeys,” says Kip Cassino, vice president, research at Borrell.
But media sellers have little choice but to tackle the sector. Total interactive spending--advertising and non-advertising spending--is forecast to rise 23.6 percent by 2013, to $9.1 billion.
Non-advertising interactive spending, the money companies plough into their sites, is expected to increase by183.3 percent, from $584 million in 2008 to $1.653 billion in 2013.
What companies allocate for online advertising will rise to $7.5 billion by 2013, up from $6.9 billion in 2008, an increase of 7.9 percent.
While that might not sound earth shattering, it is a figure that is dragged down by one particular format. The amount SMBs spend on standard-format interactive ads, such as banner ads, is predicted to fall 62.3 percent, from $3.7 billion in 2008 to just $1.4 billion in 2013.
Stripping that out, SMB local online spending nearly doubles by 2013. SMB spending on email marketing is forecast to increase $939.6 million, up 139.9 percent.
Borrell predicts that SMB spending on paid search will increase by 34.9 percent to hit $3 billion and spending on streaming audio and visual will increase 274.6 percent to hit $563.2 million.
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