Yes, Digital is Local – Exploring Borrell’s Online Revenue Report

6-14-13

There are a great many gurus out there who claim to have “the magic formula” for local digital advertising. Unfortunately, as with most media plans, the right formula isn’t a one size fits all proposition. With TV stations’ local digital advertising, there really is something for everyone.

As it stands, TV stations are taking what amounts to a fork in the road – there are “digital aggressive” stations that are expanding their customer base beyond their traditional TV advertisers. They have digital salespeople, ready to offer sponsorships, banners, pre-rolls, etc., to any and all advertisers in the marketplace, whether or not they run any TV ads.

And then there are the hybrid stations which focused upon selling their digital offerings as a line extension to their current customers. Digital supplements the traditional TV buy. Digital sales teams? Not necessary, for the most part.

Is there a “right” approach? No. In fact, the differences are also seen in marketplace dynamics as well. In some cases, it might just be a function of advertiser volume overall. Larger markets simply have more advertisers available than smaller markets, so that might have an impact upon the way they go to digital market. As such, a station sales manager in Philadelphia would probably be less likely to call the local independent florist as his counterpart from a station in a market such as Grand Junction.

It just goes to prove that even in the digital space, local matters.

We base much of this upon the 2013 Benchmarking Local TV Stations Online Revenues report, produced annually for the TVB by Borrell Associates.

Recently Gordon Borrell came up to the TVB Headquarters to lead a members’ only webinar of the latest report. Here are some of the key takeaways from Gordon’s presentation.

Local Internet ad volume growth is not maturing yet, but we’re in the early days. Borrell’s expectation is that by the end of 2013, volume will be up over 31%, exceeding the growth rate of 2012.

A majority of the local online revenues come from the pure plays – Yelp, Autotrader.com, Angie’s List, Groupon, etc. Newspapers account for about 24%, with TV stations in aggregate delivering about 12%. In 2012, TV stations’ online revenue stood at approximately 2.3 billion dollars. It’s projected to get to $2.9 billion in 2013, for a 26% growth rate. While this is positive year-over-year growth, this also means that TV stations stand to lose share to the pure plays.

Sponsorships and banners lead the way as the biggest online revenue sources for TV stations.

As this report segregates billing by platform type – banner, video, email, search, and so on – it’s able to be customized for where a station competes for dollars. For example, local stations often don’t offer search, so they are able to see their representative share by removing that from consideration.

Click here for a summary of the 2013 Borrell Benchmarking Report. For further information, contact Stacey Lynn Schulman, Chief Research Officer, stacey@tvb.org.


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