Beginning this year, Piper Jaffray sees local online advertising spending outpacing the national spend in the US.

In 2008, national and local spending levels were equal. But while the research firm projects a drop in national online ad spending for 2009, local is expected to increase by 5%.

Over the next five years, Piper Jaffray predicts a compound annual growth rate (CAGR) of 9% for local online ad dollars, compared with 4% for national Internet spending.

Borrell Associates, on the other hand, forecasts only a 2.9% CAGR for local online ad spending over the next five years. Borrell puts spending at $16.4 billion in 2013, compared with $19.18 billion for Piper Jaffray.

While Borrell believes the local online market is approaching saturation, Piper Jaffray indicates in its report that small businesses will begin to catch up with consumers online, bringing significant growth to the local online sector and moving local dollars from offline to the Web.

Piper Jaffray considers lead generation the primary goal of local advertising, and suggests that mobile presents a major opportunity on that front. With online search the preferred method to find local business info, and consumers highly connected to their mobile phones, especially during the weekends, the research firm predicts huge growth in mobile search spending through 2012.

“Local lead gen companies will play a key role in bringing small businesses into mobile advertising,” according to the report. “Small businesses need to understand that mobile can be as valuable a channel as online and lead gen players be the educators.”

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