HARRISBURG, USA: As the economy falters and operating costs rise, businesses turn to local Internet advertising to increase ROI of their marketing budgets.

A report released by local advertising research company Borrell Associates concludes that local advertisers are moving their marketing funds toward Internet campaigns to the tune of $13.1 billion this year, a 50 percent increase from 2007.

The report also predicts that local online ad spending will grow another 40 percent to $18.2 billion in 2009. Spending will eventually slow down and plateau at about $23 billion in 2012, while averaging 15 percent growth over the next four years.

Borrell points to the lower cost of online advertising as one possible cause. Internet CPMs average $3.65, the lowest of any media. A Yellow Pages ad carries an average CPM of $9.29.

President of Internet marketing firm WebpageFX Bill Craig attributes the increase in spending to the accountability of Web ads. WebpageFX has noticed an increased Internet marketing budget from several of its clients, especially larger ones.

"Web metrics outpace those of traditional advertising: impressions, click-throughs, and conversions can all be easily tracked. With other forms it is much more hit-or-miss. The accountability of Internet advertising means more efficient distribution of funds, which is attractive to our clients in a rough economy," Craig adds.
 
Internet advertising also allows small and medium businesses (SMBs) to reach previously untapped markets, crucial to growth if local opportunities prove unprofitable.

Seven out of 10 Americans use the Internet, and the U.S. government expects e-commerce revenue to top $34 billion by the second quarter of 2008. To take advantage of this massive online market, around 50 percent of small businesses and 90 percent of medium businesses currently use some form of online advertising.

The Borrell report predicts that number to increase over the next four years, benefiting online advertisers, such as Google, Yahoo!, Realtor.com and Local.com.