Local online ad spending, which Borrell Associates had previously expected to keep on chugging away before leveling off in 2012, is set for “little or no growth” in 2008, a result of the financial meltdown, the local media researcher says. Putting its numbers in context, Borrell says that offline media will drop 1.4 percent next year, while interactive media increases 7.2 percent. The report follows several other industry analysts who have steadily downgraded expectations for general online ad spending this year.

The deceleration of local interactive spending—which was viewed as the major growth engine of online advertising as the whole category began slowing last year—is pretty stark. Borrell’s report says that local online ad spend has grown at a frenetic 47 percent this year – but next year, those gains will shrink to a paltry 7.8 percent (see chart below). Local media companies can forget earlier projections of triple-digit, even double-digit growth—those days are over, at least for now. That’s especially true for most newspaper and TV station sites, which rely heavily on display ads. More details after the jump.

—Next year will be the first since the start of the century in which some components of interactive advertising show little or no growth, or may even decline. The changes aren’t cyclical, and show no sign of improving in coming years, even if the economy improves, the report states.

— For 2008, total paid search is likely to be off by 17 percent, despite 18 percent growth in local paid search. Spending for streaming audio/video is up 5 percent because of strong local performance.

—National display ad spending peaked in 2006. It would have receded to its forecast 2009-level earlier if not for artificial stimulus from Yahoo’s efforts in the display arena. It’s too early to say how much of an impact its APT ad delivery and targeting system—which is only now being rolled out to the Yahoo (NSDQ: YHOO) Newspaper Consortium members—will have over the coming year.

—B2B will account for a growing share of online ad spending. This year, Borrell says that roughly one in every four dollars spent for online ads will be related to B2B. That category will also represent 25 percent of all display ad spend, more than a third (37 percent) of all paid search spending, 10 percent of all e-mail marketing spending, and 24 percent of all streaming audio/video ad spending. 

• What Slowing Growth? Local Website Revs Set To Rise 50 Percent In ‘08: Borrell