Local online advertising will increase 32 percent in 2007, reaching $7.7 billion, according to a research firm.

The fastest-growing local online ad category will remain paid search, almost doubling to $1.8 billion and constituting nearly a quarter of local online ad spend, according to Borrell Associates, writes MediaPost. Local email spend is forecast to grow 54 percent, to $233 million, and spend on local banners and listings are expected increase 18.4 percent, reaching $5.6 billion.

Borrell forecasts local search and email to constitute fully half the local online ad market in 2010 but forecasts a slowdown in local online advertising by that date, as the local online ad market approaches $10 billion.

Real estate and automotive are the top local ad categories, accounting for one-third of all local online advertising. Real estate ads now make up 22 percent of the market. Daily newspapers' websites are among those benefiting from the gains in local ad growth.