COVER STORY: Digging for DollarsLocal TV stations get creative to make up for lack of automotive bucks and a generally downbeat economy 2/01/2009 10:00:00 PM Eastern
Staring down the barrel of an unpleasant business outlook for 2009, Rita Littles Scott, VP/general manager of WCSC Charleston, S.C., knew she had to find new ways to jump-start revenue. Witnessing the success Raycom sister station WIS Columbia had hosting advertising seminars for local merchants, Littles Scott embarked on a similar program for the attorneys, plumbers and appliance shops in and around Charleston.
Working with a firm called New Business Opportunities, WCSC sent out 1,000 letters, inviting local businesses to attend the seminars at a pair of Charleston hotels in mid-January—three days' worth of sessions trumpeting the merits of advertising on television versus other local media like the Yellow Pages and newspapers. Around 300 vendors showed up, Littles Scott says. The result: More than two dozen of them signed their first contract with broadcast television.
The effort was good for more than $500,000 in new business for the CBS affiliate. “We knew that with revenue, especially automotive, down, it would be a good way to start 2009,” Littles Scott says. “We reached out to people who thought television was too expensive and offered them the deal of a lifetime.”
As Littles Scott suggests, it's brutal out there. Any broadcasters claiming to be enthused about business prospects for the new year may want to consider dialing down the dosage on their meds.
But whether it relates to art or business, a gloomy economic landscape tends to spark exceptional creativity. Stations are coming up with novel ways to extract dollars from the marketplace—both on-air and online—ranging from launching community-focused microsites, to turning up untapped categories, to running short-term fire sales on inventory for the TV virgins in the market. And while every GM has increasingly championed “hyper-local” content the last few years, they're putting more and more effort into local sales as well—particularly with national advertising faring much worse.
E.W. Scripps, for one, is reconfiguring its stations to better grab the neighborhood dollars. “It's really about creating a culture and infrastructure that allow us to be much more aggressive in the local market,” says Senior VP of TV Brian Lawlor. He might as well be painting an industry-wide picture of an economic call to arms.
SPINNING A WIDER WEB
The across-the-board vigilance is vital, especially given the lack of light at the end of the economic tunnel for the industry. The Television Bureau of Advertising (TVB) not only took the rare step of revising its 2009 forecast in November to reflect the deteriorating economy (the only time it had previously done so was in the days following Sept. 11), but is considering revising it once again, as those forecasts of 4%-8% dips in local spot and 12%-16% plummets in national in fact may not reflect just how bad it's going to be.(See related story: TVB May Re-Revise 2009 Forecast)
“It looks worse,” says TVB President Chris Rohrs. “The [total spot] forecast was [minus] 7%-11%, but I don't think you'll find too many broadcasters who think that will be the case this year.”
While few stations across the country can say their digital revenue amounts to much more than a drop in the overall bucket, Rohrs believes a station's various digital endeavors, including Websites and mobile applications, should exceed 10% of its revenue within three years. A handful of stations are already seeing substantial cash from innovative Web plays, and many more are seeking to follow suit.
“When things are good in broadcasting, you hear a lot of 'we don't need Websites now,'” says Steve Safran, senior VP of Media 2.0 at local-media consultancy AR&D. “Now it's more, 'what can you do for me?'”
Whereas a station once viewed its Web competition as the other station sites in the market, the sites are being recast as all-encompassing local outlets designed to take on all media competition, and wrest eyeballs from the likes of Craigslist and CitySearch.
NBC Local Media President John Wallace had that game plan in mind when the NBC O&Os launched their Locals Only sites last fall. Instead of strictly breaking news, the sites are a mix of news, entertainment and general interest content, with an edgier tone that's more in line with blogs than traditional station sites. Wallace calls the sites a “brand new business”—as opposed to a relaunch—and says they're seeing double-digit traffic growth month over month.
“We want to be the No. 1 traffic driver in all the markets we're in,” he says. “We believe there's significant upside in terms of revenue.”
Some are already seeing it. At Media General's WNCN Raleigh-Durham, the launch of MyNC.com in the summer was a result of the station's “listening tours in the community,” says President/General Manager Barry Leffler. Viewers expressed a desire for both community-level content and neighborhood-specific options for advertisers. “People said TV was a waste—too expensive, and it doesn't reach the local community,” Leffler says. “Our idea was to create a whole series of hyper-local community sites, with both aggregated stories and our own content.”
WNCN launched around 21 of those, representing various regions of the DMA, along with others dedicated to topics such as music, business and health in Raleigh-Durham. Salaried “embeds” shoot and produce stories, both for the sites and the station's newscasts, and rarely leave their regional “beat.” Leffler says 165 new advertisers have come on board. “Probably 99.5% of them never would've bought TV,” he says. “It's a significant source of revenue for us.”
It's a similar story at Griffin Communications' KWTV Oklahoma City, which launched INeedThis.com in November. INeedThis.com—which, like MyNC.com, is a standalone with no visible mention of the station—is a digital directory of services in the market, with a dedicated sales staff. As with a Google search, paying clients get top billing; all others are pushed toward the bottom.
“Every business [in Oklahoma City] is a potential client,” says Griffin VP of Corporate Development Steve Foerster. “We're more aware that our future is in local—that's where we can create the relationships.”
A few hundred businesses are paying up. Foerster won't provide revenue figures, but vendors are reportedly paying around $400 per month—good for an estimated $600,000 annual stream for KWTV. “We're hitting our plan,” he allows. “It's been pretty amazing so far.”
WUSA Washington President/General Manager Allan Horlick likens the Gannett station's stable of Websites to Sen. John McCain's collection of houses—he's not quite sure how many he oversees these days. They include sites dedicated to moms, nightlife and high school sports. “It's almost like a local cable system,” he says of their demographic focus. “I'd like to see us have more.”
ON-AIR STILL ON TOP
But despite digital's vast reach, on-air will continue to be the primary revenue source for stations, as they increase their efforts to lure local marketers who've not used the medium before. Meredith's WHNS Greenville, S.C., tapped a whole new vein, so to speak, when it started doing business with the local outfits that conduct pharmaceutical tests and offer individuals cash to take part in the studies. VP/General Manager Guy Hempel, who is quick to credit account executive Brooke Maratos for bringing in the business, says he's got 15 different testing facilities on board—none of which had advertised on TV before. “It's been a good piece of business for us,” he says.
Looking to fill their increasingly available on-air inventory, stations are turning to marketers who've long relied on the Yellow Pages and newspapers for their advertising needs. Meredith's KPTV Portland, Ore., held a “48-Hour Sale” in November, targeting both those that had never advertised with the station and those that had lapsed. Sales staffers hyped the sale in 1,000 e-mails to the marketplace (“There's something big coming up!” messages teased), then followed up with a phone barrage, offering what VP/General Manager Patrick McCreery called “screamin' deals” that typically offered about a 30% rate break from a year earlier.
The sale bagged 63 clients, more than half of them new to the station, and boosted KPTV's quarterly revenue 7%. “It's the most successful sales contest/program we've ever had,” McCreery says.
And with revenue leads so hard to come by, some stations are going out of their way to work out custom packages for advertisers. That includes a far less resistant stand on product placement than in recent years. NBC's acquisition of luxury lifestyle programmer LX.TV last year has opened up an array of branded integration opportunities, Wallace says. WBMA Birmingham, Ala., hasn't sold naming rights to its chopper reports or weather coverage yet, but President/General Manager Mike Murphy says they're in play. “It's something we would not have done in the past, but we're more agreeable to now,” he says. “We would consider anything that makes sense for the advertiser and for us.”
LIN's WNAC Providence has built the morning program The Rhode Show around the concept of branded integration. Launching this month, Rhode Show will work everything from local furniture makers to auto dealers to restaurant groups into the content mix; President/General Manager Jay Howell says the station has lined up 18 such clients—10 of them first-timers. “We don't launch for two and a half weeks, and we've already exceeded the [revenue] amount we wanted at launch,” he says. “It's selling incredibly well.”
For its part, Scripps is shaping a concept called the Sales Team of the Future that will better equip stations for the current economy and the (presumably) brighter one to come. The goal, Lawlor says, is to double local business in the next three years. That would make up for the losses in automotive spending, which represented 30%-40% of stations' revenue pile not long ago. “We can't continue to be reliant on these categories that we can't control,” he says.
TOWERS & TEXTS
Station executives will consider most any new business prospect, whether it's KIAH Houston teaming with event marketers on sponsored text messages touting concerts; the viewer loyalty programs at various Meredith stations; and the different station groups, including NBC Local Media, working with Google on the search giant's embryonic TV Ads program. Around 70 stations are also at various stages of deployment with interactive TV advertising firm Backchannelmedia, says co-CEO Michael Kokernak, and some will start seeing revenue from the remote-click program by spring.
Some stations, such as WIAT Birmingham, are finding new uses for those old analog towers, leasing them to media outfits in their market. Several Fox O&Os, such as KSAZ Phoenix, have brought a range of new advertisers on board with online dating services. “It's critically important to work both ends of the spectrum—securing new customers with creative new approaches, while super-serving the more loyal and lucrative established customer base,” says Frank N. Magid TV President Steve Ridge, who emphasizes that the new approaches must focus on sustained value and not come off as “short-term gimmicks.”
Off to a strong 2009, thanks to WCSC's new-advertiser-focused seminars, Littles Scott says she'll host the sessions every year, if not a few times a year. “So many businesses never had the opportunity to hear how television can actually be affordable for them,” she says, “and that it can actually truly benefit them.”
It's a sentiment that, in these economic times, really goes both ways.