Local online advertising has yet to deliver on its promise, with online local ad spending projected to constitute only 8 percent of online ad spend this year, according to eMarketer's new report, "Local Online Advertising: Measuring the Potential." Local's anticipated double-digit growth for 2007, when local online ad spend is expected to jump nearly 51 percent and total $2 billion, will still not quite result in local's taking a 10 percent share of total online ad spend, estimated at $20.3 billion for 2007.

Moreover, there is an imbalance between offline and online local advertising spend. For example, in 2008, offline local will make up nearly 35 percent of total media, whereas online local will reach not quite 12 percent of internet ad spending, eMarketer predicts. Where there is local online ad growth, paid search is the prime driver, providing over 55 percent of the local total.

David Hallerman, eMarketer senior analyst and author of the report, points out that yellow pages and some newspapers bundle internet and print sales, which not only increases the total price but also undercuts the strategic importance of the internet to local marketers. And many merchants are set in their brick-and-mortar ways, lacking the ad budgets and not feeling at ease with the internet.

Nor are consumers particularly tuned in to local online advertising. A study of visits to Google domains during a week in May showed that of all visits only 0.05 percent were to Google Local.