Bill Caudill of Borrell Associates told a Medford audience Wednesday that businesses operating in Jackson and Josephine counties spent more than $9.7 million in online advertising here last year.

Online advertising is in a rapid growth mode.

Bill Caudill of Borrell Associates told a Medford audience Wednesday that businesses operating in Jackson and Josephine counties spent more than $9.7 million in online advertising here last year.

The spending ranges from national retailer Best Buy to locally owned electronics shops, Caudill said. By 2015 those advertising dollars will grow 43 percent to $17.1 million, making online expenditures by far the fastest growing segment of the market.

Research by the Williamsburg, Va.-based Borrell shows Jackson and Josephine county businesses directed 14.3 percent of their $68.1 million in advertising dollars to online efforts.

Caudill presented the organization's Compass Report findings in two sessions with local business people at the Medford library. The presentation was sponsored by Southern Oregon Media Group, which includes the Mail Tribune.

While Southern Oregon is geographically remote, he said in an interview, the region's advertising habits are on par with the rest of the country.

"There's the perception when you fly in over the mountains that you are not as connected as Los Angeles," Caudill said. "But you are just as connected."

Retirement-oriented Jackson County is demographically older than much of the country, but that's not necessarily a negative in attracting the online dollars.

"One of the fastest growing demographics on Facebook is women who are 55 and older," he said.

Presently, newspapers earn the largest share — 23.5 percent — of media advertising dollars in Borrell Associates' study area. That share includes only the traditional print edition and no online revenue. Likewise television advertising does not include website revenue. All online advertising is lumped together in a separate category.

Caudill predicted most of the advertising categories will see growth.

"This is a pretty healthy market in terms of most advertising formats, except Yellow Pages and direct mail," Caudill said.

Borrell Associates anticipates directories, such as Yellow Pages, will see a precipitous decline, along with direct-mail advertising, during the next three to five years. Newspapers in the market are predicted to see a 6.4 percent growth in revenue by 2015, but market share will decline slightly. Borrell predicted directories will see a 14.8 percent decline in revenue over the next four years, while direct mail will fall off 10.6 percent.

Borrell says targeted advertising by local advertisers will show the most growth in online advertising between now and 2015, capturing 44.5 percent of the online market and producing $7.6 million in spending. Targeted advertising is directed at specific individuals or groups, and can be based on their online viewing habits or their past business dealings with the advertiser. What is defined as targeted advertising has changed in the past five years.

"In 2005, it was primarily in the form of emails," Caudill said. "Today, Facebook advertising is a highly targeted medium."

Another of the biggest projected advertising gainers in the next five years is online video, which Borrell predicts will grow from $953,000 in 2010 to $3.1 million in 2015.

Such videos, Caudill said, allow advertisers to educate consumers about their products and services.

The ever-changing face of digital activity and social media will continue to be a challenge for business owners, Caudill said. "Customers are still more savvy than advertisers."

The company's research indicates businesses in the market will add about 9,000 jobs in the next five years, going from employment levels of 89,362 (according to third quarter 2010 data) to 98,290. That's a positive sign for an area where double-digit unemployment has been the norm in recent years.

"More business," Caudill said, "fuels more hiring."

Borrell says it bases its advertising report on information from a wide variety of sources, including Dun & Bradstreet, the Interactive Advertising Bureau, AdRelevance, the IRS and several other government agencies, various media and advertising industry groups, the annual financial reports of media companies and Borrell's own database of more than 3,800 local media company websites that participate in its annual survey.

Greg Stiles is a reporter for the Mail Tribune. He can be reached at 541-776-4463 or e-mail business@mailtribune.com.