• by Mark Walsh  @markfwal, January 9, 2013

A new forecast from Borrell Associates suggests 2013 will be a big year for local online advertising. The firm projects revenue will surge almost 31% this year -- from $18.7 billion to $24.5 billion as more small and medium-sized businesses shift ad spending to digital from traditional media.
 
Total advertising nationally is expected to grow just 7.5% to $157 billion, while overall local advertising -- offline and online -- will increase 8.2% to $89 billion. Online will account for 34% of spending at the national level, or $57 billion, and 25% of local ad spending, or $24.5 billion.
 
The growing share of online advertising comes at the expense of old media.

While digital spending is forecast to rise 17.6% nationally in 2013, Borrell projects that dollars going to newspapers and radio will fall more than 1% each, while other segments will see even larger declines: local TV stations (-11.5%), direct mail (-7.3%), directories (-23.9%), and telemarketing (-5.7%).
 
Online spending is expected to jump 30.8% at the local level, but newspapers will gain just 0.6%, while the budget earmarked for other print media will shrink 2.5%, and radio will fall 5.9% from last year. Conversely, the only category projected to outstrip the growth of online locally will be in-cinema advertising, at 42%.

Local online growth in 2013 will outpace even the 20% gain in 2012. Capturing the largest portion of the projected $24.5 billion in spending will be targeted display advertising, with 32%, followed by paid search (27.5%), run-of-site display (20.3%), streaming video (16%), email marketing (3%) and streaming audio (1.4%).
 
Based on a survey of 1,756 small and medium-sized businesses (SMBs) in December, Borrell found that most (54%) plan to spend the same, 20% will spend more, and 16% will spend less. While print will still claim the majority of spending overall (51%), online has pulled almost even with the share allocated for newspapers, at about 20%.
 
Social media isn’t broken out as a separate ad category in the report -- spending in the category is included in targeted display or search ad totals. But Facebook rated as the leading choice for online spending in 2013, with 28% saying they plan to buy advertising on the social network this year. “Facebook ads show little growth in share, running 25% in our Q4 2012 data and the same in our 2011 surveys,” noted the study.

Right behind Facebook in planned online spending this year was run-of-site banner advertising (25%), sponsorships (16%), targeted display (13%) and streaming video (10%).

The emerging category of mobile made up just 6% of total advertising among SMBs. But spending is expected to grow, with businesses that ran mobile programs last year saying they plan to double efforts in 2013.
 
Mobile coupons, SMS marketing, and creating a mobile-optimized presence are the main mobile initiatives that companies are pursuing. About a quarter (24%) of SMBs engaged in some type of mobile ad or marketing program in 2012 -- nearly double the proportion from the prior year. And 75% in December said they are somewhat or very familiar with mobile options, up from 40% in 2011.