TV Stations’ Web Revenue Doubled in ’05 , But Still Trail Newspaper Sites

RSS
Follow by Email
Facebook
Facebook
Twitter
Visit Us
LinkedIn

By: Mike Shields

(MEDIAWEEK) Local TV station Web sites, which have lagged behind competitors during the current Internet advertising boom, are poised to make significant strides over the next decade, particularly given their strength in delivering online video content.

That’s according to a new Television Bureau of Advertising survey conducted by Borrell Associates, “Benchmarking the Local Website Marketplace,” which found that advertising revenue for local TV Web sites generated an estimated $283 million in online advertising in 2005, twice as much as in 2004. That figure is expected to increase by 39 percent this year.

The most popular ad categories for local TV Web sites are automotive and health care, with growing activity from real estate and financial services.

Still, less than $300 million dollars in spending is hardly a massive market in the TV world, acknowledged Gordon Borrell, Borrell Associates’ president and CEO and the report’s author. In a presentation to TVB members on Jan. 10, Borrell said that local TV station Web sites trail far behind newspapers sites in revenue share, as many failed to be aggressive in the medium over the last ten years. In fact, despite strong gains, TV stations’ Web site revenue accounted for only 6 percent of the total $3.9 billion spent on local Web site advertising in 2005, which includes newspaper, directories and radio Web site advertising.

Newspapers get the lion’s share, about 43.2 percent of local Web site ad spending. “In local markets, newspapers are the incumbents,” said Borrell.

Plus, according to the report, more than 100 stations, including many UPN, WB and Fox affiliates, just started generating money from their Web sites for the first time in 2005. “Local advertisers are conservative, and don’t experiment a lot,” explained Borrell.

Yet that dynamic is quickly changing. In 2005, total revenues for TV station Web sites saw their share of local online spending increase from four to six percent. And there will be more local dollars to be had overall down the road. “Local advertising ins growing faster than any other segment of online advertising,” said Borrell.

The stations that have succeeded on the Web, said Borrell, have received buy-in from upper management. When conducting his survey, Borrell found that stations which had taken measures such as organized company-wide events centered around the Web, and those which had hired dedicated online sales people were most successful in generating ad revenue. Interestingly, to date, the sites that best met those characteristics were often from stations in smaller markets, which on average garnered three times more ad share than the larger stations’ sites did, according to the survey.

Going forward, these station sites will be faced with embracing their growing role as multimedia content providers in the new broadband Web universe, said Paul Trelstad, senior vp, Gannett Broadcasting, who also spoke at Tuesday’s event. As the Web shifts from being a text-based medium to one that is increasingly populated with video, broadband is where TV sites should enjoy the greatest benefits in the next decade. “No wonder the Web was a newspaper world to own back in those days,” he added. “Now, everyone covets our video,” he said.

While noting Gannett’s success in amassing a high-reach advertising network across its properties, Trelstad called for an industry initiative to create a national marketplace for local online advertising, citing a statistic from Price Waterhouse Coopers which found that 94 percent of all online advertising is national. “There have been very few national advertisers that have engaged in local online advertising in a meaningful way,” he said. “The missing piece is that agencies which represent national clients don’t have a way to process it.”

The study was commissioned by the Television Bureau of Advertising in advance of the ad association’s 2006 conference in April, which will focus on how multiplatform distribution channels are changing the business of TV broadcasting. Results are based on responses from about 2,300 individual Web sites.

–Mediaweek’s Katy Bachman contributed to this report.

Leave a Reply

Your email address will not be published. Required fields are marked *