TV stations take in $1 bil in online ads

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Broadcast TV stations reached the $1 billion revenue mark in online advertising sales for the first time in 2008, a 36% rise over 2007.

And though in the majority of markets newspapers are still outstripping the TV outlets with unique visitors, broadcasters are gaining ground. Last year, local TV sites surpassed newspapers in 22 out of 80 markets in terms of unique visitors, compared with only 16 markets the year before.

That's according to a Borrell Associates report commissioned by the Television Bureau of Advertising that was released Thursday during a conference attended by TV station representatives and the media.

In Top 20 markets, TV site revenue grew 65% year-over-year, with per-station online revenue surging past $1 million for the first time. Markets ranked Nos. 51 to 210 had an average gain of 33%.

However, there was a 3% decline in revenue by markets ranked Nos. 21 to 50. Gordon Borrell, CEO of Borrell Associates, said the decline mirrors a similar trend among newspaper sites.

"In the mid-market levels, they came on very fast," he said, noting that many midsized-market TV sites launched a decade ago. "They saw an awful lot of growth but hit a wall last year."

Val Napolitano, president and CEO of rep firm Petry Media, thought it "odd" that results in the 21-50 market segment were so different from the others. "It stands out as too much of a differential for me to buy it," he said.

"Some ownership groups are down 20%," a TV station executive said of the online revenue trend. "The auto category has had a big impact not only on broadcast sales, but also (on) digital." Because some newspapers are closing down, the exec sees an important opening for local TV Web sites as well as an opportunity to steal share from Yellow Page directory-type companies.

Borrell also sees a huge growth opportunity for local TV sites. He noted that of an estimated $12.7 billion in local online advertising revenue last year, stations only garnered about $1.05 billion, a mere 8.3% of the pie. The broadcasters were outstripped by newspapers (27.7%), directories (10.8%) and pure-play Internet sites (47.2%).

Only 5% of stations made more than $3 million in online sales last year. Some sites with lesser traffic targeted to niche users, such as soccer moms, generated much larger revenue per unique visitor, from $25 to nearly $70, compared with the vast majority of TV sites that generate $10 or less.

Borrell forecasts local TV online revenue at $1.826 billion by 2011 and total local online revenue at $16 billion.

Among the challenges for broadcasters is their reliance on banners and other standard- format display ads, among the lowest-growth formats, Borrell noted.

Janet Stilson is a contributor to Mediaweek.
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