Portals are poised to grow in the local advertising market, having begun to layer classified, directory and yellow pages advertising into their local services in new ways, according to a new report, "Local Advertising: Blending Categories to Compete Effectively," from JupiterResearch. "Portals are experimenting furiously in local media, driven by competition with each other," said Barry Parr, a JupiterResearch analyst and the author of the report.

"By mixing local classifieds, maps, news, reviews of local merchants, and yellow pages listings on one locally oriented page, portals are moving in the direction of erasing the artificial distinctions between local advertising media that are embedded in a century or more of print media practices," Parr said.

Some one-third to one-half of online local yellow pages searches are immediately preceded by a visit to a portal. Though local advertisers say printed yellow pages are the number-one source of leads, internet yellow pages have grown to become the second most popular ad medium.

"Local advertising media should broaden their distribution using syndication and data services to compete with portals," said David Schatsky, president of JupiterKagan. "Yahoo currently has more market share than the next five services combined, including both Google's and MSN's local services," he said.

Trackable leads and demonstrable performance are strong benefits of online advertising, but traditionally, businesses in local markets have not had the skills, tools, time, or ability to measure the performance of their advertising, according to Jupiter. More than two-thirds of local advertisers today are counting only ad clicks or nothing at all, and less than one-third are counting leads or calls generated by their online advertising, Jupiter said.