Local TV Grew Web Sales Faster Than Papers

Local TV stations grew online revenues by 10 percent in 2009 and outpaced newspapers' growth, according to a report released today by the Television Bureau of Advertising, although newspapers continue to hold a greater share of local business.

“In a year where the IAC reported flat revenue internet revenues, the performance of local TV stations is quite stunning,” said Jack Poor, vice president of strategic planning at TVB.

The report, prepared by Borrell Associates, forecast that TV stations' online revenues would grow another 21 percent in 2010 before slowing down in 2011.

“Benchmarking: TV Web Sites Defy Gravity” examines revenue sources, growth rates, site traffic and other interactive issues and offers benchmarking for stations in large, medium and small markets.

The full report noted that Internet pureplays continue to grow and attract more than half the local dollars spent on online advertising. Newspapers earn the second largest slice, but saw their market share drop from 27.7 percent in 2008 to 23.6 percent in 2009. TV stations grew their share from 8.3 percent to 8.7 percent.

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"It may be more difficult to squeeze such positive numbers from TV Web efforts in the future, however," the report noted. "Local online advertising expenditures, which saw a 45 percent Compound Annual Growth Rate (CAGR) in the past five years, are likely to see less than 4 percent growth over the next five as local online media buys peak at 17 percent of all local ad spending."

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Borrell cautioned that eliminating dedicated online-sales staff could result in lower revenues. "That has been a failed strategy for the newspaper industry, which has seen its share of local online advertising slip from a high of 44 percent in 2004 to an all-time low of 23.6 percent last year, " the report read.

The amount broadcasters derive from Web sales is relatively small compared to total station revenue – typically less than 5 percent of a stations’ total gross revenues. About 84 percent of the 573 stations in our survey made less than $1 million in Web sales last year.

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Other themes from the 43-page report include:

Competition for audience. In another sign of growing local competition, the report noted that a TV station’s Web site beat out the major daily newspaper site in nearly one-fourth of the top 95 markets.

"Many stations continued to branch out beyond the usual TV-online format and launched separately branded URLs and hyperlocal news and sports sites and even stand-alone local shopping sites," the report said.

"In the 95 markets measured by The Media Audit in both 2008 and 2009, a TV site led in 22  of those markets, while the major daily newspaper led in 73. This was a gain of 2 for TV sites in 2008, though it was due to some flip-flopping of the lead in several markets. "

Growth of mobile. Gordon Borrell, CEO of Borrell Associates, noted that the local online advertising is 15 years old and maturing. He said: “But we’re seeing the emergence of a new disrupter: mobile.” According to the report, local mobile advertising surpassed $200 million last year, with TV broadcasters capturing about 12 percent of the total. “I expect that figure to skyrocket into the billions within two years as the transition from desktops and laptops to hand-held devices takes off,” said Mr. Borrell.

Mix of ad formats. TV sites, like newspapers' and radio, continue to relay heavily on banner advertising, while Internet pureplays and directories are focus on growing ad types like paid-search, video and email marketing.

The top local ad-spending categories, according to the report, continue to be major retailers, car dealers and real estate agents—reflecting the efforts of merchandisers to meet up with consumers who are researching major purchases online. Local and state governments were also big spenders in 2009 as they bought Internet advertising to educate residents and taxpayers and placed job postings to recruit employees. Health care is another large category, comprised of hospitals, outpatient clinics, physicians, and “other” health professionals such as LASIK surgeons, dentists, chiropractors and cosmetic surgeons.

A surge in the use of coupons last year — and an even stronger surge in online couponing — drove other categories such as food stores, pharmacies and restaurants. Sites such as Coupons.com, Groupon, Coolsavings.com, Zip2Save.com, ShopLocal.com and others took hold with consumers. TV stations’ efforts in this area extended mainly to selling half-price gift certificate, typically for restaurants, as well as some experiments in mobile couponing.

The full 43-page report includes appendices listing market-by-market online advertising expenditures for 2009 and mobile forecasts for 2010. This is the fifth year Borrell has conducted the benchmarking report for TVB. This year’s report focuses on data submitted by 573 TV stations.

Borrell Associates tracks  interactive advertising for more than 4,400 local websites in the U.S. and Canada through voluntary submission of data.