Broadcast TV Stations Break $1 Billion Online
April 3, 2009
NEW YORK: Broadcast TV station Web sales broke through the billion-dollar threshold for the first time in 2008, according to a study by Borrell Associates commissioned by the Television Bureau of Advertising. TV station Web site sales totaled $1.04 billion for the year, up 36 percent from 2007, the study said. The year in progress is also tracking upward, despite the free-falling economy. Broadcast TV station Web sites are predicted to generate $1.3 billion in revenue, a growth rate of 26 percent.
“We saw a remarkable thing in this year’s survey,” said Gordon Borrell, CEO of Borrell Associates. “As we looked at the database of URLs, we saw that many broadcasters have branched out beyond merely selling banners on their ‘CallLetter.com’ sites. They’ve begun using the Web to launch new products that compete directly with newspapers, Yellow Pages and with each other. This was just theory or anecdotal until last year. Now it’s happening, and the launch of these new brands seems to be propelling those stations further ahead in revenues.”
Borrell said another change TV stations are making online is that the most successful ones are comparing their sites across the wider media market, and not just with other TV station Web sites.
“We see a handful of stations capturing five, 10, even 13 times the market share of local online advertising as their TV peers,” he said. “They are obviously doing things differently, beyond the broadcast up-sell to the Web.”
The study, based on data submitted by 718 TV stations, also indicated that station sites gained on newspaper Web sites. A local TV site beat out the largest newspaper site in 22 of the 80 markets surveyed, up from 16 last year. It also showed that the heaviest activity was in the Top 10 markets, where stations reported a 65 percent increase in Web revenues in 2008. The average per-station revenue in those large markets surpassed the million-dollar mark for the first time, hitting $1.4 million.
In conclusion, the report said TV stations would “clearly” look to the Internet to make up for lost ground in on-air sales.
“We’ve seen one large station group expecting to increase its revenues--already in the millions of dollars--by a factor of 2.5. Another group that saw its revenues nearly double last year was budgeting for the same in 2009,” it said. “A few individual stations were aiming for exponential growth instead of incremental, hoping to triple interactive revenues this year.”
The report said such goals were entirely possible given that “most of these stations are not getting 99 percent of the available revenue in the marketplace.”
Suggested strategies for getting there included looking at top local performers and doing what they do--not just TV sites, but all media platforms. It also said to employ dedicated sales personnel.
“A general rule of thumb is one salesperson per $250,000 in gross revenues. That is, a site that wishes to achieve an additional $1 million in online revenue might need four reps dedicated to online sales,” the report stated.
Cultivating new high spenders that typically don’t buy TV was suggested.
“Most TV Web sites derive at least 50 percent of their online revenues from existing broadcast advertisers--many as much as 80 percent. Top performers tend to be below 20 percent. That is, 80 percent of online revenue comes from nonbroadcast advertisers. An important distinguishing factor of top performers is that once they’ve decided to branch out to other advertisers, they aren’t bottom feeders.”
Launching non-TV niche sites was another strategy. NBC Local Media was cited for launching sites not branded to its stations. Gannett and Tribune have done likewise. Other examples include WBKO-TV’s www.findkyjobs.com; WNDU-TV’s www.michianaguide.com and WRAL-TV’s www.golo.com.
The full report is available here. -- Deborah D. McAdams