In Depth

Stations Taking Varied Routes to New Revenue

By Daisy Whitney

With political advertising an every-other-year proposition, auto marketing evaporating and traditional television audiences shrinking, local broadcasters can’t help but be on the hunt for new revenue streams.

While some are shifting their programming mix to win new advertisers on the Web, others are turning to next-generation uses of the digital spectrum or premium mobile applications, and still others are crafting ad packages to lure smaller businesses to TV for the first time.

For McGraw-Hill stations, it’s the latter.

“Everyone is looking to develop new products focused on medium- to small-sized businesses, and that seems to be where the concentration of efforts is — to find ways for smaller and medium businesses to overcome those historical perceptions that TV is too expensive to use,” said Darrell Brown, president of McGraw-Hill Broadcasting.

If successful, efforts by McGraw-Hill’s and like-minded stations could help pull in a slew of new advertisers to the local TV business. Google, through its Google TV Ads initiative, is similarly working to lure new and smaller marketers to TV who haven’t used the medium before.

Because TV has largely been an ad-supported business, broadcasters are looking there first as they aim to develop new revenue streams. NBC Local has been casting a wider net by broadening its content makeup.

Other stations may use their digital spectrum for “mobile DTV” services that deliver TV programming to handheld devices. The Open Mobile Video Coalition is taking the lead on developing the necessary technical specs and support.

On the programming front, NBC has been expanding its coverage with more localized and lifestyle-oriented Web destinations.

“When you traditionally think about local TV, the concept was around local news,” said Brian Buchwald, NBC’s senior VP of Local Integrated Media, who’s refashioned the NBC-owned station sites into city-centric ones. “One of the decisions we made as a division was moving away from the focus on local news and offering much more on local cities and the communities and to do so from a lifestyle-oriented perspective.”

The hyperlocal approach on the Web has helped win new advertisers who are eager to associate with that type of content. That includes Absolut, Southern Comfort, real estate advertisers and financial services firms like HSBC, which has made a big advertising investment in NBC Local across its sites and in taxicabs, Buchwald said.

Often, those types of advertisers have held off on local news, seeing it as a buy against crime and traffic programming. That’s why a programming expansion can bolster the bottom line.

NBC is migrating some of its Web coverage on-air in New York. On Sept. 14, the local group launched “LX New York,” a lifestyle and entertainment show spun off from its LX.TV broadband channel, on flagship affiliate WNBC-TV.

More lifestyle-focused content also makes product placement and other integrated ad deals easier to strike, Buchwald said.

Along these lines, NBC launched a fashion blog in New York called “The Thread.” And during this month’s Fashion Week in New York, WNBC carried “The Thread” segments on air. “New content attracts new advertisers,” Buchwald said.

Another new revenue opportunity lies in mobile DTV, the use of digital spectrum to transmit a TV station’s signal to wireless devices such as phones, DVD players and notebook computers.
Broadcasters in the Washington, D.C., market are currently testing a range of mobile DTV devices in a consumer showcase market, explained Anne Schelle, executive director of the Open Mobile Video Coalition. Actual devices will make their way to consumers in January and will likely enable banner ads, interactivity and voting on the mobile devices.

Some stations may use the technology as a premium service to sell applications and on-demand programming, while others may use the medium for new advertisers.

“Broadcasters are looking at the various business models right now,” Schelle said. “It enables broadcasters to have a two-way connection with consumers on these connected devices, which brings additional revenue opportunities with e-commerce and targeted ads,” she said.

Mobile DTV in Europe and Asia has proven to bring at least a 10 percent increase in incremental audience, Schelle pointed out, adding that for widespread adoption however, more mobile phones will need to be built with DTV chips in them.

Also on the cell phone front, the Fox Television Stations are exploring the use of iPhone applications.

Fox’s first foray in this area is the MyFoxHurricane iPhone application for $3.99 that’s been one of the top 10 paid weather application downloads in the iTunes store. It helps users stay up to date with hurricane warnings.