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Borrell: The big local slowdown has begun

Borrell Associates has reworked its local online ad forecast for 2009. “For local interactive media, the big slowdown has begun a year earlier than we anticipated,” the reports reads. “The spending levels by local advertisers — which have grown at a frenetic 47% this year — are expected to slow down to a relatively paltry 8% in 2009. Local media companies projecting double-digit and even triple-digit increases in their interactive budgets next year will have a very difficult time meeting those expectations — especially if they rely on banner ads.” Borrell predicts a decline in “standard format” display ads but continuing growth in local search and local video.

Last April, I told a session at RTNDA that I believed many local TV station sites would see flat to negative revenue growth in the near future if they failed to innovate online. Now, I believe it’s more dire — even sites that have been working hard to create innovative new products will get hit hard, especially if they’re highly dependent on TV deals extended to the web (in other words, if they haven’t established their own quality online sales relationships). And especially if they’re highly dependent on traditional display advertising. And worse yet, some of those innovative products will not survive because 1) advertisers are less likely to experiment and 2) sales teams are refocusing on “core” priorities.

Depressing news, for sure, but I’m still incredibly bullish on the local web, especially with search, video and mobile. The goal is to connect local businesses with local users in meaningful ways, not just drive more page views. Some companies will take advantage of the recession to invest in key local opportunities and emerge with a competitive advantage.

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