Gordon Borrell, who oversees the Borrell Associates research and consulting firm, is asserting that the online advertising business is much larger than most believe.

Borrell recently suggested that e-mail advertising alone could top $12 billion within a few years, a number well beyond anyone else's estimates.

"Are we nuts?" Borrell asks. Well, he defends himself by suggesting his methodology is more about ground-up understanding of the spending, not the revenues, in the industry. The revenue-based approach essentially tallies what the major recipients get, but there is a larger story out there of advertising on smaller sites.

He calculates, too, that there are countless smaller companies advertising below the radar.

"The amount advertisers are spending is truly stunning, and much larger than most people imagine. Those who understand the true breadth of opportunity are more likely (in my humble opinion) to get a larger share than those who underestimate it," he writes.

Borrell Associates says local e-mail advertising is going to boom in the years ahead and newspapers stand to capitalize on it.

The massive marketing channels newspapers possess are powerful tools, says Borrell, and the activity for email advertising will grow more than 150 per cent to more than $2 billion in the U.S. by 2013.

Borrell VP Peter Conti is quoted on Clickz as saying only a small percentage of local media is focusing on this source of revenu. He argues that newspapers should be hiring a database manager to seize the opportunity.

A new BIA-Borrell Associates study concludes that online news sites are hitching themselves to a falling star in remaining tethered to the newspaper. Declining revenues in print will only harm the business opportunities for online. Pure-play online sites are best positioned to weather the storm, the report notes.
The reason newspapers may need to be severed is that their online revenue isn't expected to grow dramatically in the context of declining print revenue.
The report set out to valuate Web sites. The median newspaper Web site: $3.5 million.

The challenge for newspaper companies is to venture into the digital space with the same prominence, and the latest Borrell Associates online revenue survey indicates they're doing that.
Newspaper online revenue surpassed $2 billion in 2007 in the U.S., which puts them ahead of all local media companies and accounts for some 27 per cent of the overall online revenue pie. Newspaper firms held a three-to-one advantage on television and Yellow Pages.
One of the more interesting findings in the survey was that non-newspaper advertisers accounted for a majority of the revenue for the first time --- some 59 per cent of the total.
Video is the fastest growing of the advertising and is expected to quadruple in 2008. And the survey indicated that extra staff for online sales pay off handsomely.

What would you like first today, the good or the bad?
Let's go first with the bad: The private equity firm Quadrangle Capital Partners is telling newspapers they have to find ways to appeal to those under the age of 40 or their market valuations will remain depressed and prospects "not great." (The Reuters story on the report is here.)
Then the good: Newspapers appear to be succeeding in securing a front position in local online advertising revenue. The Borrell Associates annual survey indicates newspapers have a roughly three-to-one lead in market share over such competitors as Yellow Pages, TV and radio online.
Which suggests that, if advertisers are making the right call, the newspaper companies are starting to do better things to attract a younger audience.