After posting more than 20% growth in 2011, U.S. online ad spending is forecasted to surge another 23.3% in 2012, jumping ahead of print advertising for the first time. Industry analyst eMarketer expects double-digit annual growth to continue through 2014.
“Advertisers’ comfort level with integrated marketing is greater than ever, and this is helping more advertisers—and more large brands—put a greater share of dollars online,” said David Hallerman, eMarketer principal analyst.
Print advertising in newspapers and magazines will continue to decline while Internet ad spending rises. Online advertising is expected to reach $62 billion by 2016, nearly double the $32 billion anticipated for print ads in the same year. When compared to the TV ad market, which is expected to see modest gains in the years ahead, the gap between online ad spending and TV ad spending, which was nearly 100% in 2011, is expected to significantly narrow, closing in on 15% by 2016.
Local.com Corp. (NASDAQ: LOCM), a local-oriented media company that enables brick-and-mortar businesses to connect with online customers, is a major beneficiary of the secular trend toward online ad spending. Well-positioned in a high-growth niche of this trend, LOCM gives investors a unique opportunity to profit from the evolutionary changes in advertising.
“Local marketing is quickly emerging as one of the biggest opportunities in the shifting marketing landscape,” said Shane Vaughan, vice president of marketing for Balihoo, an Inc. 5000 local marketing automation firm.
LOCM is a leader in the local search advertising business, where companies pay triple-digit premiums for local keywords. Through December 2010, the majority of this business was generated in partnership with Yahoo. More recently the Company has added a relationship with Google, which provided a boost to third quarter results and is anticipated to drive further growth in the soon-to-be-reported fourth quarter numbers.
Beginning in early 2011, the Company embarked on a series of acquisitions and new product launches, leveraging its core customer base and diversifying its revenue stream. With these initiatives, LOCM now distributes daily deals to hundreds of thousands of email subscribers in 14 markets via Spreebird, rich media ads via Rovion, and real-time product inventory information from more than 60,000 retailers nationwide via Krillion. Together with ExactMatch, the Company’s suite of website design services, hyperlocal display ads, and social media marketing services, LOCM is now a one-stop shop for online advertising solutions.
As the online ad spending trend continues to strengthen, LOCM shares are set to move higher. Broker-dealers Canaccord Genuity and Morgan Joseph have buy ratings on LOCM with a median price target of $4.90.
With the Company expected to exit 2011 with a record run-rate of $96 million in revenues, now is the time to build a position in LOCM shares. For more information, please download our research report on LOCM and view the Company’s recent presentation from our virtual conference.
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