Kozlen Communications

Borrell Associates predicts that local online advertising faces another banner year in 2007, as local businesses continue to seek new, more efficient ways to drive traffic. It will grow to a $7.7 billion category in 2007, a 32% growth over 2006. However, Borrell projects a slowdown in the growth of standard online ads by 2008, a further slowdown in 2009, and a flattening or perhaps even a mild decline in local online advertising by 2010 as online promotions begin to attract more ad dollars away from traditional advertising.

In the near term, online ad spending will continue to migrate toward targeted forms of online advertising such as e-mail and paid search. The report expects local video advertising to become a trackable category within the next year. The biggest online ad opportunities currently revolve around real estate and automotive. Combined, these two categories comprise slightly more than one-third of all local online advertising.

Web advertising revenue in the first six months of 2006 reached an all-time high of nearly $8 billion, a 37% increase over the same period in 2005, according to a report from the Interactive Advertising Bureau and PricewaterhouseCoopers. The study also found that search ads increased 40% during the first half of the year, and classifieds increased by 20% during this period.

Several months ago, NBC was threatening a lawsuit against video site YouTube.com, for distributing the SNL skit “Lazy Sunday.” Consumer backlash against NBC resulted in the launch of NBC’s DotComedy.com video distribution site. Since that time, NBC has learned the power of YouTube and has started distributing promos of its shows on the site.

You can’t do anything like this without the inevitable individuals that are offended any company would dare invade their corner of cyberspace. In a very un-TV network-like manner, NBC created a video called “Bill the Promo Guy” in which Bill asks viewers to understand he does the promos because the salary he receives for producing them puts his son through prep school and buys his daughter a horse. NBC finally gets YouTube and the evolving consumer.

Pocasting has seen 15-30% year-after-year growth and is one of the fastest growing advertising media available. Podcasting delivers on a very attractive premise: I want to be in control of the shows I like, when and where I watch or listen to them.

Audiences are growing, particularly with the under-35 demographic. According to Arbitron, 11% of Americans have listened to an audio podcast, and 53% of them are under 35. This is very attractive to advertisers, but effective audience measurement and targeting capabilities is difficult. Similar to the trajectory of Internet advertising, podcasting was somewhat rudimentary initially, yet it’s been steadily winning over advertisers, with $315 million or 1.5% of radio marketing dollars shifting online. As a result, companies like Clear Channel are starting to offer time-shifted versions of their radio programs on the Internet to tap this new distribution. As these mainstream content providers adopt podcasting, they are likely to bring their existing advertisers with them.