January 28, 2006

Directional media (Yellow Pages, local search and classifieds advertising) revenues will reach $119.8 billion globally in 2010, a 1.9 percent increase over 2005 revenues of $109.2 billion, according to a new forecast by The Kelsey Group.

The Kelsey Group defines “directional media” as advertising that is delivered to potential buyers when they are in the process of making a purchase or buying decision.

“We integrated classifieds advertising in our forecast for the first time this year, as the lines between Yellow Pages, local search and classifieds blur,” said Neal Polachek, senior vice president, research and consulting, The Kelsey Group. “We are seeing digital driving much of the overall growth in directional media. This applies even in the classifieds segment, which will see a slight decline in print revenues over the forecast period, while online classifieds will grow to fill in some of the gap.”

Directional media revenues are segmented as follows:

Global print Yellow Pages revenues will increase 1.5 percent from $26.3 billion in 2005 to $28.4 billion in 2010.

Global local search revenues (Internet Yellow Pages, local search and wireless) will increase 30.5 percent from $3.4 billion in 2005 to $13 billion in 2010.

Global classified advertising revenues will decrease 0.2 percent from $79.5 billion in 2005 to $78.5 billion in 2010.

The forecast also features a view of the mix between fixed and performance-based advertising models (e.g., regular monthly fee vs. per action) and a view of the split within performance-based models between clicks and calls. In the U.S. The
Kelsey Group expects performance-based models to significantly increase their share of revenues during the forecast period, growing from 3 percent in 2005 to 26 percent by 2010 compared to fixed models, which will decrease from 97 percent to 74 percent during the same period. Performance-based phone leads or “pay-per-phone call” revenues are expected to grow to $3.7 billion (in both online and offline media) by 2010.

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