After years of questions about the profitability of online advertising for broadcast stations, a new report predicts that online revenue is set to climb 17 percent this year; this comes after a solid year of growth in 2010.
The report was conducted by Borrell Associates and commissioned by TVB, an association of TV broadcast groups, advertising sales reps, syndicators, international broadcasters and more than 500 individual TV stations. It found that the top local ad-spending categories continue to be general merchandise stores, car dealers and real estate agents. Online sales at TV stations grew by 14 percent in 2010 to a record $1.4 billion. That amounted to 6 percent of total gross revenues in 2010, up from 3.5 percent only three years earlier.
Average station revenues on the Web were $750,000 last year, while the top stations booked more than $10 million in online business. The study predicts continued growth: a 33 percent increase for 2012.
“Despite search, despite social networks and despite national portals’ focus on local sales, TV station sites continue to grow in share of the local online ad spend,” said Jack Poor, TVB’s vice president of marketing insights.
The 41-page report, “Benchmarking: TV’s Local Online Sales,” studied revenue sources, growth rates, site traffic and other interactive issues of 630 stations and offered benchmarking for stations in large, medium and small markets.
Borrell Associates, which conducted the research, tracks interactive advertising for 4332 local websites in the United States and Canada through voluntary submission of data. This is the sixth year Borrell has conducted the benchmarking report for TVB.
Gordon Borrell, CEO of Borrell Associates, said the industry might be on the cusp of a breakout year.
“Mobile applications will inject new excitement into an otherwise flattening Web-advertising environment and as TV’s most familiar form, video advertising, goes interactive,” he said.
The report made several recommendations to TV broadcasters. While online video has a bright future, it said, there’s as much risk in TV stations losing broadcast video advertising as there is gaining it online. A key strategy for TV managers, the report said, is to look for more opportunities to deliver video advertising in more creative ways than just preroll. E-mail advertising also has an equally bright future; although, it tends to go untapped by TV stations, the report said. Sales training (and retraining) is becoming a requirement to survive in both the old media and new media environment, it added. Also, incremental growth is achievable with little effort, which means exponential growth might be achievable, Borrell said.