Classified Ads Drive Robust Growth Of Local Online AdvertisingClassified Ads Drive Robust Growth Of Local Online Advertising

U.S. spending for online local advertising is forecast to grow 26 percent to $3.2 billion this year and increase to $5.3 billion by 2010, according to a report released Wednesday by JupiterResearch.

According to the report, "U.S. Local Online Advertising Forecast, 2005 to 2010," online classifieds will drive that growth and other types of local advertising will lag behind.

Classifieds currently account for about 70 percent of spending on local online advertising, according to the report. "Outside of classifieds, local ad spending online remains relatively immature," said David Card, vice president and senior analyst at JupiterResearch .

Online publishers and networks are better off serving national advertisers seeking local audiences than serving local businesses, Card added.

On another front, pay-per-call technologies, where advertisers pay for calls driven from ad searches, show promise but face uncertain growth, said JupiterResearch Senior Analyst Gary Stein in a statement. In an executive survey among advertisers who use Yellow Pages, 30 percent were interested in the technique. More than 40 percent said they were "very uninterested."

In 2004, local spending drove only 5 percent of online display advertising and 16 percent of paid search listings, according to the report.

"Local service-based companies will lead the second wave of online local spending, but only if they are offered ad models that make sense for them," Stein said. "Pay-per-click doesn't make a lot of sense if you don't value your site as a source of leads."