MediaFile

A new article from the Boston Consulting Group sheds some light on the world of online local advertising, a $21.2 billion market  in the U.S. and cited often by a variety of players from AOL’s hyper local network of news sites, Patch, to Yahoo as a the holy grail of ad dollars.

What the authors found is that small business owners – think of the local mom and pop run pizza parlors and  hardware stores-  only dedicate a fraction of their advertising budget to online.  BCG’s Sebastian DiGrande, David Knox, Kate Manfred and John Rose surveyed 550 small business owners in the U.S. who said that only 3 percent of their marketing dollars go toward online advertising. Instead they turn to newspapers and coupon mailers to find new customers.

“People think the small and medium enterprises are spending a lot of money in digital and the truth is that is not correct,” said Rose, a senior partner and managing director at BCG, said in an interview.

In reality most local online ad dollars come from larger businesses, such as auto dealers or retail chains which look more like national advertisers than small shops.

Rose said there is an opportunity to wrangle more of those dollars from small business  to online even though its difficult to parse the market opportunity since the landscape  is so fractured.

Google just put out a study touting metrics as a way to sell more advertising.

But the most interesting part of the study is the timing. It comes on the heels of the Facebook advertising fiasco, when just days before its hotly anticipated IPO, General Motors said it would stop advertising on the social network, raising the question of the value of a Facebook ad.

The lure of online advertising has always been the promise of immediate and precise information (in theory at least) about how an ad worked. In industry speak, it is referred to as ROI– return on investment.

Google and Facebook are fierce rivals for online advertising and part of the reason for Facebook’s astronomical valuation (yes, even though its IPO was widely considered a flop)  is the promise of it sucking up more ad dollars down the line.

It’s the season for getting a peek at private Internet companies’ financial results.

Wall Street is still chewing over Facebook’s recently revealed numbers, and on Monday, OpenX Technologies, a private, venture-backed online ad company, served up some financial gristle of its own.

The company, which provides an online ad exchange as well as ad server technology, said that it is now on track to generate more than $100 million in revenue on an annualized run rate basis and that it became profitable in the fourth quarter of 2011.

The newspaper industry had a lot of bad knocks this year. Advertising revenue continued to decline, when just about every other media sector — like local broadcast TV, for example – rebounded beautifully. For newspaper companies  the term “moderating ad revenue declines” has become the new flat.

Now comes word from the research firm eMarketer that online advertising in the U.S. is expected to outgun newspaper advertising in 2010. For the year, online ad spending is expected to rise about 14 percent to $25.8 billion, while print advertising spending in newspapers is expected to decline about 8 percent to $22.8 billion. The research firm includes everything from Google and eBay to the New York Times in its online advertising category.

eMarketer also points out that total ad spending for newspapers including print and online will reach $25.7 billion in 2010, which it says is ”shy of the $25.8 billion advertisers will spend on Internet ads.”

Google has turned its flagship Internet search engine into a key advertising channel for businesses over the past decade.

But Google has a variety of other online properties that it believes are also well-suited for advertising, and on Tuesday the company began to effort that appears intended to ramp-up advertising on its specialized search engine for images.

Google executives told reporters at a briefing in San Francisco that its Image Search product, which has cataloged more than 10 billion images of everything from celebrity photos to impressionist paintings, generates more than 1 billion page views everyday – a rare nugget of information about Web traffic from the search giant.

Microsoft’s Bing search engine hasn’t put a dent in Google’s mastery of the market yet, but executive Yusuf Mehdi thinks it could do so soon, once the search ad partnership with Yahoo is completed.

Bing might even make some money eventually, he suggested in an interview today, once advertisers start to see it as a creditable alternative to Google.

But how long does it have to achieve those goals? Microsoft has lost more than $5 billion in its online business in the last four years. The company keeps saying it is a long-term project, but surely it has to see results soon.

Google wants its online news site to feel more like the good old print product.

And the company is prepared to pay for it.

Google took the wraps off of Fast Flip on Monday, a slick online tool that lets readers flip through articles from newspapers and magazines as quickly and effortlessly as if they were turning the pages of a magazine.

The company said it will share advertising revenue with the 30 publishers whose content is currently available on Fast Flip, including the New York Times, the Washington Post and Newsweek.

Obsessive Google-watchers may recall that rumors of this product emerged back in June.

Convincing marketers to try a new type of Internet ad format isn’t easy, especially during a time when ad budgets are getting cut.

But Meebo has come up with a novel way to entice advertisers to take the plunge: the company will guarantee that Web surfers spend at least 30 seconds interacting with ads that run in its new advertising units.

The new ads are integrated within the Meebo real time communications service, which provides instant messaging and link-sharing capabilities on more than 40 Web sites including myYearbook, CafeMom and Current TV.

The battle to build the best Internet search engine gets plenty of press.

But with the economy in the doldrums, the Internet giants are also engaged in a heated race to improve their advertising offerings.

Yahoo and Google, the top two search sites in the US, are rolling out new features and services designed to grab a bigger slice of the advertising dollars that businesses spend to hawk their wares.

On Monday, Yahoo unveiled a self-serve display advertising service which allows companies to create their own online ads.

Google built its business on the advertising shift from traditional media, like TV and newspapers, to the Internet.

But as Google strives to jump-start its fledgling Chrome Web browser, the company apparently still sees value in good old-fashioned mediums like broadcast television.

Google said it would begin advertising Chrome on various TV networks beginning this weekend.