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Our annual forecast was released today. The headline of the news release is “Global Ad Revenues for Print and Internet Yellow Pages and Local Search to Reach $38.9 Billion in 2011.” The subhead is “Kelsey Group analysts expect continued growth of Internet Yellow Pages and Local Search.” Not surprisingly, members of the press picks up the story and play it according to the business they're in. MediaPost wrote “Kelsey: Online directory ads to top $11 billion in 2011.” IMedia Connection ran the headline “Local Search Boom Forecasted by 2011.”

The real story it seems to me is that print Yellow Pages will actually grow worldwide, albeit slightly, from $26.5 billion in 2006 to $27.8 billion in 2011. Given what is happening to the rest of traditional media, especially print, growth in PYP is pretty darn amazing. Red Herring had a different take on our forecast. Its headline was “Search Ads Displace Yellow Pages.” That is not the way I read our press release, but I guess I can see where Red Herring got it. We predict global online directory revenues (Internet Yellow Pages, local search and mobile directories) will grow at a CAGR of 22.3 percent through 2011.

Everyone expected online to grow faster than print, but the real surprise to us was the revelation that Internet Yellow Pages growth will outpace local search. I think that Kate Kaye of ClickZ got it right in her headline “IYP Growth Rate to Surpass Local Search Through 2011.” While the actual size of the local search market is expected to be greater than that of IYP (both traditional display/inclusion advertising and revenues from the sale of search advertising through the Yellow Pages channel), the fact that IYP has been able to make the necessary adjustments to compete against local search is another real story.

The forecast will be an important element of debate at The Kelsey Group’s upcoming conference, Drilling Down on Local ’07, to be held March 19-21 at the Santa Clara Marriott.

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