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Spinning Web Into Profits

Jun 23, 2003  •  Post A Comment

Online advertising has become a catalyst for TV stations to generate new broadcast dollars. That’s the conclusion of a report that local media research firm Borrell Associates plans to release early this week. The findings are backed up by mid-year numbers provided by TV stations and their Web partners.
TV stations as a whole generated about $72 million in online advertising revenue in 2002, about 4 percent of the total $1.65 billion pie spent in local Internet advertising, according to Gordon Borrell, president of Borrell Associates (borrellassociates.com) in Portsmouth, Va.
About one-quarter of the 157 stations surveyed were using their Internet sites specifically to lure new-to-TV advertisers, such as real estate and employment recruiting, said Mr. Borrell.
NBC is one of the station groups leading this trend and expects to generate at least $35 million in Internet ad sales across its 14 owned-and-operated stations this year, up from about $25 million last year. More important, NBC owned stations will bring in this year an additional $70 million to $80 million in new broadcast revenue, either from increased share on existing deals or from entirely new advertisers, said David Overbeeke, executive VP and chief information officer for NBC. The broadcaster expects to seal 2,500 convergence deals this year across its 14 stations, up from 700 two years ago.
Since on-air viewing declines during the day and online usage rises, Internet ads allow advertisers to expand their reach during office hours, he said. Mr. Overbeeke thinks Nielsen should measure online audiences in combination with on-air viewers, in light of the fact that stations such as New York’s NBC O&O WNBC-TV generate an additional 674,000 unique viewers each month.
Internet revenue is a drop in the bucket compared with the broadcast dollars that stations draw, but its significance is strategic, Mr. Borrell said. “TV stations are incredibly dependent on local ad dollars because of the drop in network revenue. If the Internet provides the catalyst for reaching new advertisers, then it is a very significant issue,” he said.
Successful sites had some common characteristics. They were usually either part of a network of Web sites, like IBS or WorldNow, or were pursuing classified advertising on their Web sites, like Liberty Corp. or Belo Corp. Web sites using a network partner generated 53 cents per TV households from their Web sites, compared with 17 cents for stations sites that were not using a network platform, according the report.
IBS operates local news Web sites for 70 TV stations around the country, including sites in the top 10 markets. Its broadcast partners include NBC, Hearst-Argyle, Cox, Post-Newsweek and others.
For the first half of 2003, the 70 Web sites are pacing to generate $28.9 million in online ad revenue, which is 62 percent higher than where those same sites were at this time last year, Tolman Geffs, CEO of IBS, told TelevisionWeek in a preview of the company’s earnings report.
In May the 70 IBS sites counted 16.5 million unique visitors and served 227 million page views. That’s a 90 percent increase over last year.
WorldNow’s TV station Web sites that have been up and running for more than a year are delivering 5 percent of total on-air dollars through convergence sales of online and on-air packages, said WorldNow senior VP Sandhi Kozsuch.