Broadcast TV hits $1 bil in online ads
Borrell report shows 36% increase over 2007Broadcast TV stations reached the $1 billion revenue mark for online advertising sales for the first time in 2008, a 36% rise over 2007. And while in the majority of markets newspapers are still outstripping the TV outlets with unique visitors, the broadcasters are gaining ground. Last year, local TV sites surpassed newspapers in 22 markets out of 80 markets, in terms of unique visitors, compared with only 16 markets last year.
That's according to a Borrell Associates report commissioned by the Television Bureau of Advertising, which was released this morning at a conference attended by TV station representatives and the press.
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 51-210 had an average gain of 33%. But there was a 3% decline in revenues by markets ranked 20-50. Borrell Associates CEO Gordon Borrell said that decline mirrored a similar trend among newspaper sites.
"In the midmarket 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."
"Some ownership groups are down 20%," said a TV station executive requesting anonymity, in speaking of the online revenue trend. "The auto category has had a big impact not only on broadcast sales, but also (on) digital." Because so many newspapers are closing down, he 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 out of an estimated $12.7 billion in local online advertising revenue last year, stations garnered only about $1.05 billion. That represents a mere 8.3% of all local online revenue. The broadcasters were outstripped by newspapers (27.7%), directories (10.8%) and pureplay Internet sites (47.2%).
Only 5% of stations made more than $3 million in online sales last year. Some sites with smaller amounts of traffic targeted to niche users, such as soccer moms, generated much larger revenue per unique visitor, from $25 to almost $70, compared with the vast majority of TV sites generating $10 or less.
Borrell forecasts local TV online revenues at $1.826 billion by 2011, out of total local online revenue of $16 billion.
Among the key challenges for broadcasters is their reliance on banners and other standard format display advertising, which is one of the lowest growth formats, Borrell noted.
Also, there's a need to devote more sales people to online sales in order to see big revenue increases. It's a real Catch-22 to dedicate people to online pursuits in such a tough economy, said Francis Comerford, president of platform development and commercial operations at NBC Local Media, a division of NBC Inc.
"I agree that having focused digital teams makes a difference," Comerford said. "By shifting assets, both on the creative side and sales side, we've been able to gain more in that marketplace. Because if you don't, you really can't compete. 55% (of NBC Local's sales team) is core television. The remainder is a combination of business development and digital."