ISO More Revenue? Try Classifieds
By Peter Krasilovsky, Borrell Associates -- Broadcasting & Cable, 4/20/2003 8:00:00 PM
Broadcasters pride themselves on being a hub for local commerce. Yet they have largely steered clear of local classified advertising, which represents at least $18 billion annually and an entrée into more than 11 million small businesses that have advertising budgets.
Television, of course, doesn't directly lend itself to a listings-oriented service like classifieds, which involve mostly finding new employees (43%), selling automobiles (21%) and selling real estate (17%).
But with the emergence of the Internet, television stations are now well positioned to tap into classified revenue streams. Their own Web sites are an obvious way to earn revenue in direct competition (or partnership) with newspapers and vertical providers such as Monster.com and Hot Jobs. Or they can tap into classified revenue streams via on-air and online cross-promotions with traditional classified advertisers.
We aren't delusional here. Most TV stations don't do much with their own Web sites other than promote their weather, anchors, sports and network programming. In a just-released study conducted with Corzen Inc., a data analyst firm, Borrell Associates has determined that annual online revenues earned by TV and radio stations represent just 3% of the $1.65 billion local online ad market, or $48 million. Although there are five times as many television and radio outlets as newspapers, broadcasters earn less than 1/13 of the $655 million that newspapers earn online.
Even if station Web sites remain under-leveraged, however, the Internet represents hidden gold in other, critical ways. Using their unmatched on-air promotional capabilities, for instance, broadcasters can help drive traffic to advertiser Web sites. By doing so, they can win a piece of the action via upfront ad buys or even sales commissions. Such alternative, lead-generated models may prove increasingly important as the Web continues to "disintermediate" traditional advertiser-media relationships.
The timing for getting started appears to be especially good. By making an attempt to post their own listings on their Web sites, advertisers may put themselves in an excellent position to lessen their dependence on newspapers—or at least increase their ability to negotiate better rates.
The challenge for advertisers, of course, will be to build sufficient traffic to their site. This is where the power of broadcaster promotion comes in. Indeed, if advertiser sites can aggregate enough listings and build ample traffic, they will be positioned to not only save money on their marketing costs, but they will be able to sell ancillary advertising around those listings. Broadcaster sales forces will be well positioned to help make such sales.
Broadcasters aren't going to steal the classifieds market overnight. There are, in fact, many reasons for broadcasters to partner with newspapers in the broadband era, rather than compete head-on. But broadcasters that continue to ignore the many, Internet-centric opportunities in classified ads will be missing out a lucrative opportunity.
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