Local online advertising is going up. It’s also up for grabs.
The battle has been fierce, and it is getting worse.
A report by Borrell Associates estimates that local advertising will increase to $132 billion in 2016.
Digital spending will make up about half of the total, followed by newspapers at 10 percent and TV stations at 9 percent, the report says.
Among digital advertising expenditures, targeted display ads will consume 70 percent of the total.
Google and Facebook Dominate
Anecdotally, the two biggest consumers of online advertising budgets are Google with a 31 percent share and Facebook with a 12 percent share of the total worldwide market, according to the Wall Street Journal.
Together, they control nearly half of all worldwide digital advertising revenue.
Facebook had a 43 percent growth in revenue between 2014 and 2015 to a total of nearly $18 billion. Ad revenue in the first quarter of 2016 was up 57 percent over the same period a year ago.
The two companies are growing revenue faster than either the total growth in all ad revenue and the total growth in online ad revenue.
Emarketer predicts that online advertising will grow 15 percent this year.
That means digital advertising will consume a growing share of total spending, while traditional advertising will decline in share.
Problems for Traditional Media
So problem number one lies with traditional media — newspapers, television, cable, radio and outdoor. Emarketer says that all forms of traditional media will continue to see steady year-over-year declines in spending.
Other sources of competition are adding to their problems. While online advertising may grow 15 percent in 2016, the number of pages indexed by search engines is growing as much as 70 percent a year.
That means the competition for those local digital dollars is growing much faster than the pot of gold.
Traditional media began pursuing digital advertising as far back as the invention of the first Web browser, but their share of online dollars has steadily declined.
What to Do? Grow Audience to Grow Revenue
It almost sounds like a way of making the situation worse, but growing the pages and audience of a site is one way of pursuing more ad share.
Building market share is not just about quantity. It’s also about quality.
The quality of the site experience translates into better ad performance (clicks), more audience and more frequency of visits.
- Design a site to load quickly in the browser.
- Emphasize the quality of the writing.
- Build multiple sections with strong content.
- Use attractive photos and graphics.
Local online advertising also goes to sites with local online audiences.
Sites reach local online audiences if they are well optimized for search engines using SEO. Search engines are the No. 1 source of traffic for almost all Web sites.
Good SEO for a local Web site starts with using the names of the communities that are relevant to the site in the document title, headline, article, etc.
Google and especially Facebook have grown ad revenue at high rates because they emphasize targeting — keyword, geographical and demographical.
Targeting provides the best return on investment for an advertiser because it is the most efficient way to reach a highly qualified audience.
Competitors to Google and Facebook will find they must provide targeting to deliver efficient, cost effective results for their advertisers.
Ad delivery systems, even the freely available DFP system from Google itself, provide websites with the ability to target.
Local media websites have an advantage with targeting because they have large local audiences, so they have a competitive edge with online advertising.
Brand Drives More Revenue
Another useful step in building local online advertising is branding. Brand has great value because it is entirely a function of perception and memory.
Brand means the local audience is starting to remember the name of the site and come to it without using search engines to find it.
When the brand starts to grow, advertisers pay more attention.
Besides, in many cases, advertisers also are site users.
Why would an advertiser pay to advertise on a site he or she has never visited?