Borrell Associates, Inc

We have issued our Top 5 recommendations for local online advertising in 2010. They’re pretty straightforward:  Identify and copy the fastest growers, start partnering with other companies, offer “promotions” services to advertisers, monitor but be cautious about mobile, and dive into video advertising. But I thought I’d also offers some predictions for 2010 that might startle you.

First, I’m excited to announce that we have a new list of speakers we’ll be announcing this week for our Feb. 8-9 conference in New York. In the spirit of identifying and copying the fastest-growing local online advertising companies, we’ve gone to the trouble of identifying them for you — and getting their top executives to stand up at our conference and tell you why they’ve become the new darlings of Main Street.  We’ve also secured speakers from companies like Fisher Broadcasting, which has launched 43 hyperlocal sites in Seattle that are fast becoming profitable, as well as leading revenue producers in email, video, promotions and paid search.  Wait ’til you see the final agenda.

OK, on to the startling things.  I believe that 2010 will see a clear divide between the local media companies that are crossing the gorge and those being left behind.  Positive growth in Internet revenues will be the delineator.  Those who continue to see declines will clearly have tied their Internet operations too closely to their legacy media companies or will have formulated products that don’t resonate with Main Street advertisers.  Other predictions:

Largest Local Online Advertising Companies, 2009

1.  Newspapers rebound.  Look for a 2-4% increase in newspaper ad revenues next year.  Smaller papers might fare better.  Those who make the digital transition will see up to 20% of their total ad revenues coming from the Internet next year.  The Yahoo-newspaper partnerships will generate $200 million to $300 million in geo-targeted banner sales.

2.  Local Internet advertising grows 5-9% next year, making it harder than ever for many companies to ride whatever tide is left.

3.  Mobile advertising skyrockets (on a small base), but local ad buys remain short-term and experimental.

4.  Cable companies dive deeper into local Internet sales.  Look for acquisitions and partnerships like we saw with the Yellow Pages in the early to mid-1990s.

5.  Yellow Pages continue a precipitous decline, high single digits but perhaps double digits for some.  Meanwhile, their Internet revenues will grow to comprise one-fifth of ad revenues.

Predictions are no more than educated guesses, so I really didn’t want to spend too much time on speculation.  The recommendations are key to what I think you should be watching.  The largest local online advertising companies are interesting to observe, but the fastest-growing ones above $25 million in revenue are the ones worth studying — and copying.

I hope you can make it to our conference.  We’re going to spend a lot of time dissecting these companies and learning why local advertisers have become so enamored of what they’re offering.