Local media sites are in the fight of their lives for relevancy right now. Both newspaper and TV stations are scrapping it out for local online audiences and the advertising revenue that those eyeballs can generate.

A new report released today from Borrell Associates (Executive Summary is a free PDF download) reveals that, strangely, print media are doing a much better job of generating revenue from video advertising on their sites than the local television counterparts.

They also predict that by 2012, video ads in addition to paid search ads, will dominate these local sites. More interestingly for readers of this blog, real estate is being eyed as a key vertical for growth.

Online competition between newspapers and broadcast TV stations – the leaders in local advertising – will intensify this year as both sides develop Web-based video products. The clash will focus on automotive advertisers initially, though real estate, health and employment are prime targets as well.

This growth in online video advertising likely means video production companies like Turnhere (who can produce “Advertorial” type videos) are well positioned to capture some of this new market.

It also means there’s probably going to be a huge demand for some sort of service that will help negotiate placement for video ads on all these local sites (i.e. a Spotrunner for the local web). I wouldn’t be at all surprised if this is something that Google makes a move into shortly.

Realtors eyeing a real bleeding-edge way to differentiate themselves in the local market should consider video advertising. You’ll be the first on the block, but if Borrell’s right, the rest won’t be far behind.

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