With the economy going south and operating operating costs rise, businesses are turning to local Internet advertising to increase ROI of their marketing budgets.

A report released by advertising research company Borrell Associates concludes that local advertisers are moving their marketing funds toward Internet campaigns to the tune of $13.1 billion this year, a 50% increase from 2007.

The report also predicts that local online ad spending will grow another 40% to $18.2 billion in 2009. Spending will eventually slow down and plateau at about $23 billion in 2012, while averaging 15% growth over the next four years.

Borrell points to the lower cost of online advertising as one possible cause. Internet CPMs average $3.65, the lowest of any media. A Yellow Pages ad carries an average CPM of $9.29.