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Element of Choice Draws in Online Viewers

Wall Street Journal - February 4, 2010 by Suzanne Vranica

Aiming to wrest more advertising revenue from online video, several companies led by ad giant Publicis Groupe and including Microsoft, Yahoo, CBS and Hulu, have spent the past year testing online ad formats to figure out what consumers want.

It turns out they want choice.

The new research shows that consumers are likelier to watch and recall an ad that they choose than one that is forced on them. "Having to select an ad makes consumers more engaged," says Beth Dyenco, global research director of Micrsoft's advertising and publisher solutions group.

For Whom the Bell Tolls

October 7th, 2009 by Gordon Borrell

A seminal event will occur on Wall Street tomorrow morning. At precisely 9:30 a.m., Heath Clarke, the CEO of Local.com, will ring the NASDAQ opening bell. In so doing, he will essentially ring in a new theme on Wall Street: Local is the new black.

In a report we will release today, Local.com is listed as one of the Top 3 fastest-growing local online advertising companies in North America. This is a remarkable feat in a year when ad sales are phenomenally depressed for seemingly everyone else. Yet Clarke's company is seeing growth of 34% this year on revenues that are expected to top $50 million.

Internet advertising down? Not for Local.com, which is aggressively mining the lucrative new frontier of "local." Clarke's company - and others like it, such as Yodle (with a whopping 210% growth rate this year) and Yellowbook.com (with a 98% growth rate) - are the ones to study.

I've invited the top digital executives at some of these companies to speak at our conference in February. I want to learn more about how these companies are doing it.

Our report on Thursday will show local Internet advertising rising at a rate of about 12 percent this year. Many legacy media companies who are suffering double-digit declines in online sales growth will find that hard to believe. But as the bell clangs today and the trading begins, it may as well be an alarm clock for them, and for anyone else trying to mine digital gold in the local hills.

You Need Online Reps to Drive Online Sales (Doh!)

July 29th, 2009 by Gordon Borrell

Whenever I make a presentation, one of the biggest laughs comes when I show a cartoon of a man explaining a plunging line on a flip chart. The caption reads, "The dip in sales seems to coincide with the decision to eliminate the sales staff." We just completed a survey of 382 local ad sales managers that shows something just as dramatic. Sites with online-only sales reps make substantially more than those who rely exclusively on their seasoned print or broadcast sales staffs.

This revelation should come as no surprise to online managers. They've been telling us all along that print and broadcast reps "just don't get it." It's not meant to impugn their intelligence; it's just that those reps have their hands full trying to maintain existing customers. Online managers tell us regularly that they can drive revenues faster with a sales staff whom they can actually fire for not meeting sales goals. Our vice president of sales training, Bill Caudill, tells us that, after a training session, 30% of the reps "get it" and actually go out and sell online advertising. After three months, he says, half of them forget it.

More on the research. We asked front-line sales managers across the U.S. and Canada to take a 12-question survey about sales compensation, number of reps, online revenues, and related issues. We'll publish the full results in mid-August. Respondents were split among those representing radio, TV, yellow pages, newspapers and Internet pure-play companies. Overall, 41% said they relied exclusively on "legacy media" reps to sell online advertising. Wow, what a mistake. I don't think anyone can cite a single example of a sales staff selling two competing products and getting a significant share in both. It doesn't happen, and no amount of digital pixie dust sprinkled over a print or broadcast sales staff will change that truism.

This, by the way, doesn't mean that print or broadcast reps should NOT be selling online advertising. They should be trained to sell as much as they can. You don't want to leave that money on the table. But relying exclusively or too heavily on legacy media reps is a quest to achieve mediocrity.

The most startling bit of information from the research is this: Of those with reps dedicated exclusively to selling online products, 46% of the sites were making $1 million or more. Of those that relied solely on their print or broadcast reps, 14% of the sites were making $1 million or more.

One more result from the survey: Of those who rely exclusively on legacy-media reps to sell online advertising, 49.7% said those reps exhibited an "average" or "poor" understanding of how interactive media could serve advertisers.

I rest my case.

Local online advertising may be up

June 30th, 2009 by Gordon Borrell

MAIN STREET GOES INTERACTIVE

Borrell Associates Executive Summary

March 17, 2009

As larger businesses appear tapped out, headed for bankruptcy, or just extremely reluctant to continue longstanding advertising practices, local media companies are scrambling to find new customers along Main Street. These small- and medium-sized businesses, or SMBs, in aggregate may seem like a bonanza: There are more than 14.6 million SMBs, and they tend to overspend on advertising relative to their size.

In reality, however, the SMBs in any market are less like a two-ton gorilla and more like a thousand four-pound monkeys - difficult to chase down, and almost impossible to corral The smallest U.S. businesses have average annual sales of $212,000 and spend just $5,671 per year on advertising - typically in the yellow pages or on direct mail ads or on coupons. But all that's changing with the rise of the Internet - where they are now investing 11 percent of their advertising, up from less than 4 percent three years ago.

These SMBs are blurring the lines between what's advertising and what's not. They consider whatever they spend on their own Web sites to be "advertising," though in actuality that spending is a technology, design and telecommunications expense. When marketing professionals were asked in which media they intended to spend more money this year, two thirds of them said …. "my own Web site."

As their Web sites look increasingly like storefronts with shopping carts and checkout counters, SMBs are being deluged with offers to drive traffic to them by placing listings in online directories, bidding for keywords on search engines, running e-mail marketing campaigns, and buying display ads on media Web sites.

The SMBs are listening, but not quite cooperating. They are less receptive to buying banner ads (now accounting for 54 percent of their online spending, but declining) in favor of search-engine advertising, online directory listings, and streaming video. And they are diverting money toward something that feels to them like advertising, but in reality is technology-supported marketing: Web site design, search engine optimization and customer databases.

Their current rate of interactive advertising spending is no drop in the bucket. The nation's 14.6 million SMBs were responsible for more than $6.7 billion in locally generated, locally targeted interactive advertising in 2008 - more than half of the U.S. total. And while the smaller merchants spent less than $300 each on Web site support last year, we are forecasting that SMBs will triple this "non-advertising" marketing expenditure over the next few years. SMBs are collectively poised to plow billions of dollars into their own Web sites.

The owners of small businesses would be well advised to understand these trends as they look to the Internet to help stimulate sales from both inside and outside their market. Many Internet marketing products are oversold and under perform. Some work well. And a few work phenomenally well.

Online ad spend to shrink before getting better

OPA Intelligence Report - 3/2/09

by Mark Glaser

Optimism for the online advertising sector used to be less growth, and then single-digit growth, and now, staying in positive territory is considered a victory. IDC recently downwardly revised its projections for U.S. online ad sales in 2009, saying they would actually drop by 5% in the first quarter, and perhaps do worse in 2Q. That comes on the heels of anemic 0.4% growth in the fourth quarter of '08, with 10% growth in search ads that counteracted a 7% drop in display ads and 18% drop in classifieds. In local online ads, things aren't much better. Borrell Associates predicts local online ads will only grow 4.7% this year, compared to 50% growth in 2008. "The last five years there's been a growth curve and all of a sudden they're realizing this is an across-the-board downturn in every sector," said TV Guide Network's Richy Glassberg at the recent IAB confab, where the mood was sour, AdAge reported.

On the brighter side, PaidContent notes that IDC still believes online advertising will have positive growth in all of 2009, with a prediction coming for 5% growth for the whole year - making up for the tough first half. BernsteinResearch was also slightly optimistic, believing that global online ad sales will rise 5.9% this year, with 4.1% growth in the U.S. and 7.2% abroad. Bernstein is bullish on search ads, predicting worldwide growth this year at 11.3% and American growth at 11.4%. And even in local ads, BIA and Kelsey Group believe things will shift long-term, with a projection that online share of local ad spending will go from 9% in 2008 to 22.2% in 2013 - with a compound growth rate of 18% per year.

Online Advertising up in 3rd Quarter

Associated Press - November 21, 2008

Despite the bad economy, U.S. Internet advertising revenue rose in the third quarter, according to an analysis released Thursday.

The report from the Interactive Advertising Bureau and PricewaterhouseCoopers LLP said online advertising revenue totaled $5.9 billion in the third quarter, up 11 percent from the same period last year. It marked a 2 percent rise from the second quarter.

About 10 percent of all money spent on advertising in 2008 is going toward online ads, according to British advertising company ZenithOptimedia.

Internet Advertising Trends

There is no question that the growth of Internet advertising is outpacing offline advertising. As more and more companies realize the real value in advertising their goods and services online, they are diverting funds from other forms of offline advertising to compensate. Consequently, the market share of Internet advertising is continually growing while the market share of offline advertising mediums stagnates or declines.

At the current rate of growth, Internet advertising will overtake radio advertising in spending and market share in just a few years. While outdoor advertising is also experiencing growth, it is not growing as rapidly as Internet advertising, and Internet advertising has already overtaken it.

The dominant forms of offline advertising, television, newspapers and magazines, still hold the lion share of the market, but their market share is expected to decrease slowly over the next few years. Some estimations predict Internet advertising will hold as much as 10% of the global advertising market share by 2009.

2009 OUTLOOK:
BIG SLOWDOWN BEGINS
FOR LOCAL INTERACTIVE ADVERTISING

Borrell Associates - November 2008

Forecasting how businesses will spend their precious ad dollars next year is like skeet-shooting in a windstorm. We've got the velocity and trajectory down pat, but the gusts caused by the credit crisis make it harder to pinpoint the target. The generalities, however, are certain for 2009: spending on traditional media will decline, while spending on interactive will increase.

Our latest forecast has offline media dropping 1.4 percent next year, while interactive media increases 7.2 percent.

For local interactive media, the big ad slowdown has begun a year earlier than we anticipated. Spending by local advertisers - which has grown at a frenetic 47 percent this year - is expected to diminish to a paltry 7.8 percent in 2009. Local media companies projecting double-digit and even triple-digit increases in their interactive budgets next year will have a very difficult time meeting those expectations - especially if they rely on banner ads.

The credit crisis has magnified trends that were already in motion. For most of this decade, advertisers have been viewing interactive media as a more efficient, less costly way of reaching consumers than traditional media buys. "Adjusting the dials" of advertising expenditures is normal business behavior in bleak economic environments. It can be seen in prior downturns as far back as 75 years ago, when radio advertising got a big boost (at the expense of newspapers) during The Great Depression, and 17 years ago when cable advertising expenditures accelerated during the 1991-92 recession. The dials are just about adjusted for interactive media, with some final tweaking occurring next year.

But just saying that interactive advertising will see mild increases next year isn't telling the entire story. Not all forms of it are forecast to show the same rate of growth. We are expecting a decline in "standard" formats - banners, pop-ups, and interactive display in general - in 2009. As new advertisers move to the Web, they are less inclined to spend their newly-shrunken ad budgets on traditional formats that they perceive to be less effective. The same "John Wanamaker Syndrome" that aects traditional media - "Half my advertising works, and half of it doesn't. Trouble is, I don't know which half!" - is now creeping into the interactive advertising world. The sparkle of banner advertising has dimmed, and advertisers are turning their attention toward newly sparkling formats that may hold greater efficiency: e-mail, paid search and streaming video.

In summary, 2009 will be the first year since the start of the century in which some components of interactive advertising show little or no growth, or may even decline. The changes foreseen are not cyclical, and show no sign of improving during forthcoming years, irrespective of upward movement in the nation's economy. No form of advertising yet invented has grown forever. Interactive ad spending is no different. However, the downward trend of some interactive ad formats has been hurried along by a massive economic downturn.

October 17, 2008

BIA Financial Network has teamed up with Borrell Associate to analyze local Web site revenues, expenses and growth trends in an attempt to answer these questions. What emerged was another strong indication of the fundamental changes taking place in the media industry; local Web sites generate important value for their owners, especially for woners that have positioned their sites for growth in ke high-demand advertising categories such as e-mail, streaming video and paid search. Some of these local Web sites are woth between $300 million and $450 million, and even small sites are seeing values in the low millions of dollars.

Not all local sites are created equal. Newspaper-owned Web sites tend to have the highest revenues, but their valuations are constrained because their gowth rates have slowed and they are selling mainly banners and listings - relatively slow-growth advertising categories. TV, radio adn local pure-play sites tend to have higher multiples associated with their valueation because they are better positioned for future growth.

LOCAL WEB SITE VALUES

Borrell Associates - September 2008

The oldest newspaper, radio TV and "city.com" Web sites turned 14 years old this year. In that short time span they have evolved from being interesting experiments to become their parent organizations' center of attention and financial saviours. Some of them now generate millions in revenue and significant profits, and have high potential for continued growth - begging the question of just how much these local Web sites might be worth.

As traditional media companies increasingly find themselves on or headed for the trading block, the need to place a separate value on these Web operations - at a far greater muliple of revenue or profits than their parent properties - is growing. And what about the independent city.com sites such as Atlanta.com, LosAngeles.com or Toledo.com? Could these brash upstarts be creating value that might one day challenge their more mature media brethren?

Slowing Economy Hits Online Advertising
July 8, 2008

-By Brian Morrissey

CNEW YORK The slowing economy is cutting into online ad growth -- although it is likely to take a greater toll on offline media, according to a new survey.
 
William Blair & Co. surveyed 150 Chicago-area interactive marketing companies to gauge the health of the medium. While it discovered a positive outlook, the investment bank found the gloomy outlook for the economy slowing growth.
 
Two-thirds of respondents said economic turbulence is affecting spending. Respondents indicated an expectation Internet advertising would grow slightly more than 16 percent in the next year. In its previous surveys, William Blair tracked 19 percent growth expectations. The areas forecast to thrive: paid search and direct response ads that can be tied directly to ROI.
 
"Online's healthy, but the economy is definitely having an impact," said Sean Riegsecker, CEO of Centro, a Chicago ad service for newspaper sites, in a conference call to discuss the findings. "In a weak economy, people are going to move more towards direct response. We're seeing brand advertising take a much bigger hit this year."
 
The findings come as ad forecasters revise their projections for the sector because of the slowed economy. Magna Global svp Bob Coen now expects 12 percent growth in online display advertising, a sharp correction from the 16 percent bump he forecast last December.
 
Dave Marsey, group media director at Digitas, said: "It seems like advertisers are holding back until they see what's going to happen over the next few months. All boats seem to rise and fall with the tide."
 
One effect of the rocky economic climate: Ad price inflation is slowing. While last year's respondents pegged price increases at 7.3 percent, this year's prices are up 3.2 percent. William Blair attributes this to the vast amounts of inventory now available thanks to the popularity of social networks driving down prices for remnant inventory.  The bank expects CPMs will continue to decline at portals and vertical sites.
 
"It's holding steady," said Marsey. Absent of the economy, it would have been higher.
 
Google's current run of success in Internet advertising, at the expense of rivals Microsoft and Yahoo!, is expected to continue, according to a new survey of interactive marketers.

William Blair found 61 percent of respondents identified Google as the Internet media company best positioned for the next two years. Facebook was the top choice for 11 percent of respondents. Yahoo! got nods from just 6 percent, down from being the top choice of 30 percent in the previous year's survey.
 
William Blair sees a confluence of factors that are benefiting Google while hurting Yahoo!. Users are visiting more sites, making Google's search engine more important, yet conversely weakening Yahoo!'s lead as a portal. The growth of social networks is putting pressure of Yahoo!'s display ad business, too, driving down prices and taking away time spent on Yahoo!. What's more, the Internet remains the choice for direct marketing budgets rather than brands, the survey found.
 
"You're not going to prove to a brand advertiser that I'll show you a click on an ad and it'll move budgets," said Gian Fulgoni, chairman of comScore, an Internet measurement service.
 
Marketers identified behavioral targeting, mobile marketing and social networks as areas poised for growth over the next year. William Blair estimates social networks now account for 15 percent of overall time spent online, although their corresponding ad revenue is far lower at 4 percent.

The percentage of respondents advertising on social networks rose from 41 percent in last year's survey to 62 percent this year. The key to increased spending identified by the survey: better targeting. William Blair believes social networks occupying as central a role in advertising as they have in consumer behavior will be a long slog.

2008 Perspectives On Local Online Advertising and Content
Marchex

Excerpts from this Report....

Consumers are increasingly relying on local search to make decisions about where to spend their money and time offline. In fact, 86 percent of Internet users search for local products and services, up from 70% in 2006 (Neilson/Net Ratings Survey) and more than 90 percent of the transactions resulting from these searches are completed offline (Yahoo Search).

A recent study by comScore Networks and TMP Directional Marketing, found that local search grew 24 percent in 2007, while general Web search grew only 14 percent.

Recognizing an opportunity, advertisers’ investment in local online advertising services are projected to grow from $8 billion in 2007 to nearly $20 billion in 2011, equaling the $20 billion spent on total online ad billings in 2007 (Veronis Suhler Stevenson, 2007).

Improved and more affordable mobile data services will only tip the trend towards consumption of local information faster. Mobile will extend the applicability of content originally developed “by locals for locals” to travelers who seek an insider’s edge on how to get the most enjoyment out of their visit to a given neighborhood.

The adoption rate of online advertising services by small- to medium-sized businesses (SMBs) will continue to rise, driven by local sales channels such as AT&T. SMBs are becoming savvier about where they spend their advertising dollars, and local sales channels are placing an increased emphasis on Internet advertising sales. They are introducing new online advertising services that prove their value through detailed reporting and analytics, which are similar to what large marketers have grown accustomed to.

Local advertising is nothing new to most marketers. In fact, about $100 billion will be spent on local advertising this year. However, marketers are only beginning to tap in to the massive audience of buyers searching the Internet to determine not only what products and services to buy, but whether they want to purchase them online or at a provider’s place of business.

According to Yahoo! research, 88 percent of sales revenue generated from online advertising is derived from consumers who have done their research on the Internet then made their purchase in a brick and mortar store.

The local search and content landscape is fragmented across a plethora of providers including search engines, Internet Yellow Pages, local search and review sites, and newspapers. The lack of leadership in providing local content online is a testament to the challenge. Google may attract the majority of searches with local intent, but there is still no trusted source of complete local information that users can rely on.

As local searches return richer answers related to communities, users will rely more on local content online. Beyond hotels, restaurants, and classifieds, there isn’t a central repository of information about our neighborhoods online, whether it is the status of a construction project down the street or high school sports results.

As citizens are empowered to share more information about where they work, live, and play online, users will begin to search for that information online. The availability of business reviews has certainly been a driving factor in rising local search volume. Users check restaurant reviews before they go out for a special occasion or research contractors before having work done on their homes.

Local information sites are all trying to make their sites better. The key question is, better for whom? Success will be directly correlated to participation – and not just the number of end users (consumers). Site owners also need to engage business owners, and site owners themselves must participate. Multiple participants are required to promote an ongoing conversation. This gives a site vitality and relevance, and encourages return visits.

Businesses have joined the community. They understand the importance of participating in the conversation. Local information sites offer programs that allow merchants to enhance their presence on the site, such as the ability to add a logo, photos, description, offers, etc; and, on occasion, businesses join the conversation directly by writing responses to consumer reviews.

The problem: merchants must select which local information sites they will focus their resources on to manage their presence in the community.

The solution: the sites offering the greatest extent of participation by all groups will emerge as leaders. Merchant participation will accelerate in 2008.

The problem: most sites don’t participate in the community they enable.

The solution: local sites need to understand their customers’ needs and share their “local knowledge” about the information available on their site. The more site owners participate in the conversation with timely information, the more users will return to the site because they want to, not just because they need to. Participation is what makes the most popular portals, blogs, sports, and news sites successful.

Small businesses understand the importance of advertising, but their focus is on running their business. They don’t have time to research all available advertising options. They don’t have unlimited budgets, and sales people are always calling on them. They trust tested proven methods, and they need to be convinced that new methods are worth their investment. A sales channel that can communicate a compelling ROI story for Internet advertising will find an audience with small businesses.

Any new sales channel needs to establish and maintain credibility with small business owners. As these businesses receive sales pitches from numerous representatives, they become very discerning. A trusted partner, with whom they have an established relationship, such as their existing Yellow Pages publisher, is in a strong position to sell Internet advertising. To ensure that traditional media sales representatives can deliver this message effectively, many local sales channels have committed to online advertising sales training programs.

A real estate agent identifies himself as a real estate agent. A tennis and sporting goods store owner describes herself as such. So, even if a sales channel or agency can address all of the previous elements properly, they still need to speak to small business owners in their own language, avoiding local ad speak.

Ultimately this calls for local online marketing offerings tailored to specific business categories. Determining the optimal blend of business model and inventory sources will be a prerequisite for success as mass adoption takes hold and business owners become more discerning. This is what will keep us all at the top of our game for years to

"The continued robust growth of the industry indicates that marketers increasingly understand and appreciate the benefits of interactive advertising," said Randall Rothenberg, President and CEO of the IAB. "Marketers large and small have come to accept digital media as the fulcrum of any marketing strategy."

"Internet advertising revenues are on an annual run-rate exceeding $20 billion, further demonstrating the industry has truly come into its own," said Peter Petrusky, director, Entertainment, Media & Communications Practice, PricewaterhouseCoopers. "The emergence of new platforms, including broadband video, rich Internet applications, mobile, and social media promise to deliver new benefits for consumers, and create exciting new venues for marketers to realize value in digital media."

"The results of the survey continue to underscore the value that interactive advertising brings to the marketplace, as marketers and agencies build on established guidelines and best practices to control costs and maximize returns from their growing interactive budgets," added David Silverman, partner, Assurance, PricewaterhouseCoopers.

RAMA Research Finds Magazines, Television and Newspapers Prompt Online Product Searches
-- Young Adults Using New Media to Communicate About Online Searches --  

Washington, DC, March 12, 2007 – Though there is no question that online searches are becoming more popular among consumers, what exactly triggers those consumers to search online? In a recent analysis of BIGresearch’s Simultaneous Media Survey (SIMM 9) conducted for the Retail Advertising and Marketing Association (RAMA), consumers say they take cues from traditional advertising to determine when and where to search for merchandise online.

Consumers said that they were most motivated to begin an online search after viewing advertisements in magazines (47.2%), newspapers (42.3%), on TV (42.8%) and from reading articles (43.7%). Women were more likely than men to be motivated by coupons (41.8% vs. 29.0%) and in-store promotions (29.0% vs. 24.5%) while men were more driven to start an online search based on a face-to-face conversation (36.1% vs. 29.5%).

“When it comes to advertising, retailers always need to be careful not to put all of their eggs in one basket,” said Mike Gatti, Executive Director of RAMA. “While search engine marketing continues to be a popular strategy, retailers should not lose sight of traditional advertising channels to promote products and services.”

After searching, online consumers said they are most likely to communicate with others about their search through face-to-face discussion (68.9%), though email (53.1%), telephone (50.9%), and cell phone (30%) communication were also popular choices. Young adults 18-24 are also taking advantage of an influx of new media, communicating about service, products and brands by instant messaging (37.5%), text messaging (23.7%) and through online communities like MySpace and Facebook (20.6%).

”Retailers must realize that online communities are now producers and through their stories are able to extend the distribution of traditional media with a trust and truth not even approximated by mass media,” said Joe Pilotta, Vice President of BIGresearch.

Shoppers continue to use the web as a resource before determining which items to buy and where. According to the survey, 92.5 percent of adults said they regularly or occasionally research products online before buying them in a store. Products that are most often researched online before being purchased in a store include electronics (50.8%), apparel (31.9%), and appliances (27.0%). Men were twice as likely as women to shop for automobiles online (20.2% vs. 10.2%), though women research home décor products more often than men (18.9% vs. 11.6%).

About the Survey: The SIMM 9 survey is a consumer centered survey of 15,287 consumers, which is conducted two times each year. SIMM measures consumption across media, retail channels and products and provides marketers with unique, holistic consumption insights for improving marketing ROI. SIMM 9 was collected in November and December of 2006. The SIMM Survey has a margin of error of plus or minus 1.0 percent.

Publisher's Newsletter
No. 1 Web site worth more than best local radio station

November 9, 2006

By Marc Wilson

Your online newspaper can earn more money than the local Yellow Pages and the largest radio station in your market. Your online newspaper might even become more profitable than the largest local TV station.

That’s the conclusion of a new study conducted for the Suburban Newspaper Association by Borrell Associates.

“The steady growth of local (Web) sites over the past seven years has turned many of them into mature, sizable ventures generating more revenue and cash flow than the local Yellow Pages books in their markets,” the Borrell report said. “Many markets will hit another milestone this year: The biggest local Web site – typically run by the major daily newspaper – will generate more revenue than the largest-grossing broadcast radio station in the market.”

We knew, via multiple Belden research studies, that many online newspapers were attracting two to three times the cumulative market share of the largest local radio station.

Now, Borrell is telling us that savvy newspapers are turning that marketplace dominance into revenue and cash flow.

“In 36 markets we chose at random,” the Borrell study says, “we found 15 local sites surpassing the largest terrestrial radio stations in those markets in terms of gross revenue. With double-digit annual revenue growth over the next four years, it is conceivable that a large local Web site will gross more than the largest cluster of radio stations owned by a single company in its market by 2010…and perhaps more than the largest-grossing TV station.”

Wow.

That’s big news for publishers looking for a business plan to replace revenue bleeding away from print products. That’s assuming the newspaper doesn’t cede the opportunity to a competitor – a local radio or TV station, or an online-only startup.

Borrell added: “These Web sites could be considerably more valuable than the broadcast stations: Their profit margins are often double that of radio stations — 60 to 70 percent EBITA (earnings before interest, taxes and amortization) compared with typical radio margins of 25 to 35 percent — and their growth potential is far higher.”

Regular readers of this column know that one of my most repeated themes is the need for the local newspaper to “own the Internet.” This is a franchise that can be developed with relatively little cost — and can be hugely valuable in the future.

But the Borrell report noted that newspapers aren’t guaranteed the spot as the No. 1 local Internet site. “Joining the pack last year … were the Johnny-come-latelies — the TV and radio stations that had written off the Internet as a fad just a few years ago, and a whole new crop of entrepreneurs attacking the market from the ground up with home-grown local sites.

The new sites and newspaper Web sites increased online sales pressure that “drove local online ad sales up 78 percent last year, to $4.8 billion.”

Intel from reports such as the Borrell study, are causing newspapers to take decisive action.

Gannett, the nation’s largest newspaper group, earlier this month launched an innovation known as the “ Information Center.”

Gannett CEO Craig Dubow defined the Information Center as “the newsroom of the future." He called it “a way to gather and disseminate news and information across all platforms, 24/7. The Information Center will let us gather the very local news and information that customers want, then distribute it when, where and how our customers seek it. It is the essence of our Vision and Mission and a key element of our Strategic Plan.”

Dubow, in a Nov. 2 memo to Gannett employees, said 11 pilot projects had tested the concept and created “stronger newspapers, more popular Web sites and more opportunities to attract the customers advertisers want.”

“Implementing the Center across Gannett quickly is essential,” Dubow added. “Our industry is changing in ways that create great opportunity for Gannett. Innovations such as the Information Center are one way we are meeting the challenge and implementing our strategic plan… Let me close by saying I truly believe the Information Center will transform our industry…”

His memo added: “Creating an Information Center means retooling the newsroom, expanding into multimedia, embracing community interaction, shifting resources and rethinking the way a community is covered.”

He said larger Gannett newspapers will create actual desks to accomplish these tasks while smaller papers “will combine multiple jobs into various areas.”

Gannett has clearly seen the need to fundamentally change the way it does business in order to “own the Internet.”

Borrell shows that there’s great value in such ownership.

Somebody is going to own a very valuable Internet franchise in your community. Will it be you, or will you let the opportunity slip away?

(Marc Wilson is CEO of TownNews.com and president of The Job Network. He is reachable at marcus@townnews.com.)