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paidContent - Borrell: Social Nets Slowly Start To Capture Local Ad Spend

This story was written by David Kaplan.
Social nets are going local, says Borrell Associates in a blog post, which has found that community sites get about 20 percent of their ad revenue from that space. While the bulk of social ad spending will continue to come from national advertisers, like newspaper sites, the need for incremental revenue by tapping small, local businesses that had been purview of online directories is driving some subtle changes. The impact of local ads on social net is likely to remain small. As it stands now, less than 3 percent of all locally spent online advertising goes to social nets. But considering that social net spending was thought to be purely national, a shift is likely over time.

—While the news is good for small marketers who are looking to reach social net users, most attempts by publishers to get in on the local action aren’t likely to add up to much: to wit, 57 percent of all that local social-networking advertising is going to two sites, Facebook and MySpace. They are the only two sites generating more than $100 million from local ad placements.

—Borrell, which specializes in local online media research, says its starting to notice local ads being placed either through Google (NSDQ: GOOG) or Yahoos contextual placement program. But again, those ads are probably done through a third party and not by the advertiser directly, so it doesn’t necessarily mean that social nets can aim their sales forces at the local pet shop or plumber. Borrell’s report follows eMarketer’s fuller outlook for social net ad spending, which is expected to rebound next year after this year’s 3 percent decline, real movement of local ad dollars isn’t likely to move much this year either. As for local in general, Borrell recently reversed its pessimistic forecast  and now anticipates an 11 percent rise in the space this year, once again bucking wider trends.


By David Kaplan
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