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BIA/Kelsey’s geotargeted display ad forecast was released today, projecting 16 percent annual growth from $897 million in 2008 to $1.9 billion in 2013.

The geotargeted segment of the overall display ad market (banner advertising) will meanwhile grow from 10.2 percent to 15 percent in the same period. The highest growth rate in the forecast belongs to geographically targeted display ads bought by small and medium-sized businesses (as opposed to national advertisers targeting locally).

The SMB segment will grow from $45 million in 2008 to $565 million by 2013, a compound annual growth rate of 66 percent. This segment will also grow from 5 percent to 30 percent of the total geotargeted display ad market over this period.

“The basis for growth of the geotargeted ad market is rooted in the economics of existing search resellers,” said Matt Booth, SVP and program director for BIA/Kelsey. “The effective strategy for companies like AT&T, ReachLocal, Yodle and others will be to use geotargeting to increase margins by shifting spend from paid search to geodisplay.

Simply, if a lead from search costs $30, these companies will shift to display where similar quality leads can be obtained for less. The display ad networks have so much excess inventory; they will run whatever impressions are needed to meet reseller targets.”

This will be a prevalent topic at next week’s Interactive Local Media conference.

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