JupiterResearch, a division of Jupitermedia Corporation announced that U.S. spending for online local advertising will grow 26% to $3.2 billion in 2005, and then 11% compounded annually, to $5.3 billion in 2010. The newly released report "U.S. Local Online Advertising Forecast, 2005 to 2010" points out that classifieds will continue to comprise almost 70% of that total throughout the forecast period.
"Outside of classifieds, local ad spending online remains relatively immature," said David Card, Vice President and Senior Analyst at JupiterResearch. "For now, online publishers and networks will find better opportunities servicing national advertisers that are aiming at local audiences than they will servicing true local businesses," added Card. In 2004, local spending drove only 5% of online display advertising and 16% of paid search listings.
The JupiterResearch report finds that it will be an uphill battle to sell online display or search ads to local business services. "Local, service-based companies will lead the second wave of online local spending," stated JupiterResearch Senior Analyst Gary Stein. "But only if they are offered ad models that make sense for them. Pay-per-click doesn't make a lot of sense if you donÕt value your site as a source of leads. Pay-per-call technologies (where the advertiser pays for a call driven from a search ad, not a click) have promise, but face uncertain growth," added Stein. In a JupiterResearch/Virtus executive survey of advertisers who typically use Yellow Pages, about 30% of the executives surveyed were interested in pay-per-call, but over 40% said they were "very uninterested."
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