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Net merchants close in on local advertising

Online merchants increasingly will forsake national advertising for targeted local campaigns, according to a new study.

Online merchants increasingly will forsake national advertising for targeted local campaigns, according to a new study.

Online companies will spend about $2.7 billion, or 24 percent, of their advertising budgets on local media outlets by 2003, eclipsing current spending of $66 million, or 14 percent, annually, according to a study released today by Internet research group Jupiter Communications.

Should the predictions prove true, it would be a marked turnaround to the current marketing strategies of Internet companies; national television networks and print publications are overloaded with advertisements touting "dot com" companies. Such national spending leaves little money for small markets.

"Local advertising is still in its infancy," Jupiter analyst Claudine Singer said, adding that 29 percent of online companies don't spend money on small-market advertising.

"But we are at a critical inflection point, given consumers' increasing attraction to local content," Singer said.

The shift in ad spending will come as a result of growing ad budgets, greater interest in local online content and more specific data on consumers in specific geographic areas.

To date, Internet companies have ignored small-market media outlets because the information on consumers in specific regions has been insufficient and because of heavy competition from national media outlets for advertising dollars, the report said.

Jupiter also found consumers' use of local content online jumped to 58 percent from 53 percent last year. This rise in local interest online is matched by efforts from companies such as Ticketmaster Online-CitySearch, which launched a new service in November that lets consumers make reservations online for an array of local events and activities. Other major competitors in the market include America Online's Digital Cities and newspaper chain Knight Ridder.