Local TV Dives Into Multi-Platform Pool
TVB conference will stress Web sites as revenue generators
By David Goetzl -- Broadcasting & Cable, 4/16/2006 8:00:00 PM
Considering teh recent blockbuster acquisitions of MySpace.com, News Corp. believes the Internet is critical for future growth. That's why, next month, 25 Fox-owned stations will get a whole new look online as News Corp. transforms them into more-attractive advertising outlets.
News Corp.'s major investment in revamping its O&O sties is symbolic of the heightened importance now placed on station Web sites across the industry, a trend that ought to be seen in full flower at the Television Bureau of Advertising's (TVB) annual marketing conference April 20 in New York at the Javits Convention Center.
| Spot TV Versus Internet | |||
|---|---|---|---|
| The Internet gained on spot-TV advertising last year, and the trend may continue. That's part of the reason TV stations are paying more attention to multi-platform deals. | |||
| 2005 | 2004 | Percent change | |
| SPOT TV2* | $15,529.20 | $17,158.70 | -9.50% |
| INTERNET** $8,322.70 $7,343.00 13.30% *Spot TV figures do not include Hispanic Spot TV data. **Internet figures do not include paid search advertising. Source: TNS Media Intelligence |
Fox's redesigned sites will offer extensive video streams (they offer hardly any now); content from corporate siblings FoxNews.com, FoxSports.com and Sky News; an entertainment section anchored by News Corp.'s movie portal RottenTomatoes.com; and significantly upgraded local news and weather sections, including opportunities for user-generated content.
“We're going to leverage all of News Corp.'s content and all of News Corp.'s technology,” says Ron Berryman, who oversees the stations' sites in his role as senior VP/general manager of Fox Interactive Media.
The sites will also undergo a rebranding, taking on the “My Fox” moniker. For example, Fox5NY.com, the Web site for WNYW, becomes “My Fox New York,” and Los Angeles' Fox11.com, the site for KTTV, becomes “My Fox LA.”
Where the growth is
“Our members have certainly identified that this is where the revenue growth is going to come from: It's the new platforms,” say TVB President Chris Rohrs. “Traditional television is a moderate-growth business, and, in part, that's because there's money moving to new media.” Indeed, the title for the conference is Television Goes Multi-Platform.
Last year, ad spending on spot television fell 9.5%, to $15.5 billion, compared with 2004 ($17.2 billion), while Internet spending shot up 13.3% to $8.3 billion, according to TNS Media Intelligence. However, 2005 was a non-Olympic/non-political year, and TNS predicts a return to growth in 2006, though at a rate that would still place revenues below 2004 levels.
TVB's multi-platform focus marks the first time the annual get-together will focus on a single topic.
“We have a sense of urgency because the consumer has a voracious appetite for the Web right now,” says Terry Mackin, executive VP at Hearst-Argyle.
Ad growth on station Web sites has traditionally been slow for several reasons. When stations launched sites in the 1990s, they viewed them mostly as promotional platforms, a chance to provide program listings and bios of news anchors. “We didn't really view it as an advertising opportunity,” says Rohrs, who ran the CBS affiliate in Hartford, Conn., when it launched its site in 1993.
Then, as the Internet took off later in the decade, stations began to build content offerings through repurposing on-air content or posting extra information that would normally be left on the cutting-room floor. But even as the content became more compelling, stations generally were content to use the Web site as a “value-add” to attract advertisers. Advertisers were given free or bargain-price banner ads as an incentive to boost their on-air presence.
That has changed in the last two years or so. Stations are now more likely to treat their Web sites as separate businesses and profit centers. The practice of “throw-in” ads, while not a relic of the past, is less common.
“Putting a stake in the ground and saying the traffic we have has value in and of itself—that transition period in the market and inside the station—is the most fundamentally important decision that stations make. And it's the most difficult,” says Reid Johnson, president/CEO of Internet Broadcasting, which acts as a national sales agent for stations owned by NBC Universal, Cox, Hearst-Argyle and others.
Capitol Broadcasting's WRAL Raleigh, N.C., considered a pioneer in Web-site development, has held the line against throw-in ads despite the consequences, according to Bill Gilson, WRAL.com sales manager.
“We've lost some business simply because we refused to do that,” he says. “That's despite the fact we have clients who still say to us on a fairly consistent basis, 'So and so gives me the online stuff for free. Why can't you guys?' The approach we take—and our TV people have done a huge job driving this message home—is that the online piece has a really considerable value and that is not something that we're going to give away for free.” (WRAL.com has the advantage of being one of only a handful of station sites that draws more traffic than the main newspaper competition in its market.)
There is some evidence that the new “no-free-ads” policies—and a greater focus on bolstering sites' ad viability—are starting to work. Last year, station Web sites across the industry generated some $283 million in revenues, double the 2004 intake, according to a report from Borrell Associates for TVB.
That figure is expected to jump 45% in 2006 to $410 million, according to the report. Gordon Borrell, president/CEO of the consulting firm, expects the figure to increase by 50% during each of the next three years, up to $1.4 billion by 2009.
Direct challenge to stations
Still, Web-site revenues made up only about 2% of stations' ad revenue in 2005, while Borrell and others say that stations are “a little late to the party” on the Internet. Newspapers, which generally have more- successful Web-site extensions in individual markets, were generally quicker to the punch.
Now, with the proliferation of sites with rich media, streaming video and IPTV, there's a more direct challenge to television stations, prompting them to take action.
“When you have an opportunity, you can choose to do something or not,” says Borrell. “But when you have a threat, you really have to act, and that's exactly what's happened with television.”
Says Rohrs, “The world is changing so rapidly and so radically that, yes, there is some fear in the water, and that is part of the mix.”
Television stations have made increasingly aggressive moves into the space with investments in creating new content and resulting ad opportunities. While banner ads still dominate, WRAL and others are selling 10- to 15-second video ads that run prior to newscasts and other video streams; ABC and NBC O&Os are offering video-on-demand; blogs and podcasts are widespread; and Hearst-Argyle even sells advertising accompanying headlines that it distributes to cellphones.
Branded portals
Some stations are attempting to turn their sites into hyper-local portals. And many stations are giving them brands that may resonate with consumers better than their call letters followed by a “.com.” In Detroit, for example, the Post-Newsweek-owned NBC affiliate is ClickonDetroit.com. “It creates a distinct ID for the new medium,” Borrell says.
Stations have also begun to develop dedicated sales forces for their Web sites as part of separate business units, something Borrell thinks is essential for success with local sales. (TVB Executive VP Abby Auerbach refers to the new divisions as “stand-along” operations, a twist on the traditional “stand-alone.”) To secure national advertisers, many are part of two aggregated sales networks: Internet Broadcasting and WorldNow.
National advertisers are incorporating station Web sites into their media plans as a way to tap into a locally branded environment. “Local media will continue to offer great opportunities for broad-based brands to speak very individually and personally to the consumers they serve,” says Brian Wheelis, who handles the AT&T account as VP/group media director at GSD&M.
Locally, station sites have some work to do. “What's happening nationally—where agencies have dollars budgeted for online and have creative and know how to make it work—has not really filtered down to the local markets yet,” says Craig Smith, executive VP of sales and distribution for WorldNow.
In local markets, newspaper sites and national players such as Yahoo! and Craigslist have built significant strength in the three primary areas of classified online ads: real estate, automotive and recruitment. Stations will need to tap into those areas for growth.
The same goes for local search, where Google and others are eager to grab a larger piece of the pie. WRAL's parent Capitol Broadcasting has launched local search engine Triangle411.com, which offers enhanced search placements for a fee much like the national giants.
Stations' edge over newspapers
Industry execs say station sites have an advantage as they battle head-to-head with newspaper sites in local markets: promotional reach and video. “Broadcast has tremendous household penetration and can really drive Internet traffic,” Borrell says.
And since stations, unlike newspapers, are producing video all day, they have a supply ready to be redeployed to their Web sites, a significant advantage, since streaming video is one of the most coveted features online today with broadband at critical mass. Says Rohrs, “What's truly unique is the ability to post local video.”
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