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Newspapers Halt Decline In Share Of Local Online Ad Revs

This story was written by David Kaplan.
The slowdown in local online ad spending is having a unexpected effect: newspapers stopped the downward spiral in local ad revenue of the past four years, according to a report by local media analyst Borrell Associates, while the web companies not tied to what Borrell refers to as "legacy media" like print and broadcast actually began to lose ground.

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The report, What Local Media Sites Earn, which is due out later this afternoon, concluded that it helps to have a lot of salespeople, especially in a downturn. Unlike the pure-play internet companiesBorrell cites Google (NSDQ: GOOG), Local.com, Interactive Corp. (NSDQ: IACI), Marchex, ReachLocal as examplesthe traditional media side has roughly 98,000 feet-on-the-street salespeople who have existing relationships with local advertisers and can cross-sell online advertising products. And those companies are adding "internet-only" sales reps at a rapid pace, which could help offset the severe downward pressures related to the recession. At the beginning of 2009, this collective online-only sales force numbered about 9,000, up 30 percent from a year ago, according to Borrell. So far, Yellow Pages companies averaged nearly 11 percent of their gross revenues from online sales, while newspapers realized 7 percent from web-only, while radio and TV stations received 3.4 percent each from digital.

Overall, Borrell is calling for a rebound in local online advertising by next year, with spending expected to rise to $15.1 billion from the slightly better than flat $13.3 billion this year. Spending will peak in 2011 at $15.9 and then start to slowly decline to $15.3 billion in 2013.

Total 2009 Projected Local Ad Spending:  $13.3 billion
Local newspapers: 2008 Online Revenue: $3.4 billion
Local TV broadcast: $1.1 billion
Local Radio: $220 million
Yellow Pages: $1.4 billion


By David Kaplan