If you’re nostalgic for the days when neighborhood kids delivered newspapers and circulars, you may be in luck. Home delivery is back — but now it’s digital.

ShopLocal, a Chicago-based multi-channel shopping service, has launched Paperboy, technology that effectively takes the information in a retailer’s circular and expands its reach by making targeted, interactive banner ads available across the web. These ads can take geography and demographics into account, as well as target merchandise based on consumer search queries.

“With people spending more time online, we were, and still are, convinced that there will continue to be a significant shift toward digital media,” says ShopLocal CEO Vikram Sharma.

While he shies away from making specific predictions on advertising distribution trends, Sharma estimates that online advertising now accounts for $25 billion in annual expenditures, a figure that is likely to rise to $40 billion over the next two or three years.

Paperboy is simply an outgrowth of a trend that began more than a century ago, when the iconic John Wanamaker department store in New York became the first to use newspapers as a vehicle for delivering advertising circulars to consumers.

“But this time traditional forms of media are facing key challenges,” Sharma says. “We’re pushing for distribution beyond print, radio and television and into widespread banner ads, mobile phones and interactive TV.”

Retailers utilize their e-commerce sites as they would physical stores, “but there is a significant shift in media consumption” among shoppers, he says. “They are spending less time on traditional media channels and therefore there’s a reduced ROI on traditional advertising vehicles.”

Less TV, fewer newspapers
Citing Nielsen figures, Sharma says there were six million fewer primetime TV viewers in 2008 than there were in 2007, and newspaper readership is down 18 percent on Sundays and 17 percent the rest of the week.

Distributing sales information across the Internet provides “massive reach and enables you to offer the same products you have in print,” he says. “Basically, you’re repurposing the dollars you invest in print. But the result is that you’re distributing the same promotions electronically to where the consumer is — not where they’re not.”

ShopLocal has been doing some version of this technology since 2005; about 15 retailers, including Target, CVS, Home Depot, Lowe’s and Macy’s, are now in different stages of usage, Sharma says.

“Retailers need to advertise beyond their own websites,” he says. “It’s about more than just sticking an ad in the window of a retailer’s virtual store. These ads have 10 to 50 times higher interaction than typical banner ads.”

Paperboy ads can be targeted based on demographics and consumer behavior. For example, if a chosen site has a higher female demographic, a retailer might choose to exclusively advertise apparel. If more men frequent a site, it might feature more hardware items.

“Or, depending upon the site and what consumers are doing, we can pre-select products for them to view,” Sharma says. “So, if they are looking at cameras, we show them camera ads instead of ads for televisions. It’s just more targeted.”

Tied to geography
Moreover, product selection can be tied to the geography of the viewer. “If you’re in Florida, you will see lawnmower ads, whereas people in Chicago see ads for snow blowers,” Sharma says.

Where to place the Paperboy banners remains the choice of the retailer and its ad agency, though ShopLocal “can help them understand which performs better and whether they should reconsider the media mix.”

Paperboy is set to up the ante by expanding the service to mobile phones and television. “We are working with Comcast to create video circulars on demand that will give consumers the same interactive capability on mobile phones,” Sharma says, and ShopLocal also is looking at Apple’s iPhone as another potential distribution point.