It’s no surprise that TV station websites remain underwhelming in most markets. They still think of the Web as a platform for promoting their six o’clock news anchor. But since 2003, a number of stations have begun to remake themselves, leveraging their local presence with content and advertising. Some are making a dent in the local advertising market, with earnings running from $300,000 to over $1 million in larger markets.
Station groups like Clear Channel are doing it on their own. Most, however, have signed partnerships with TV website specialists, whose ranks include WorldNow, with 147 stations; Internet Broadcasting Systems, which has 70 stations, including many top markets; and relative newcomer Broadcast Interactive Media. Broadcast Interactive will have 70 stations by the end of the year, but mostly in smaller markets – the disadvantage, perhaps, of starting after WorldNow and IBS. Capitol, Schurz and Pappas are among its larger station groups.
Broadcast Interactive Chief Timur Yarnall shared his sense of where the marketplace is going with The Local Onliner. Before founding the company in 2002, Yarnall was an executive with Clickability, the content management vendor.
Yarnall says that BI’s stations typically make $300,000 to $500,000 as “a basic range.” The best sites are “hitting $600,000 to $800,000.” BI’s piece of the action comes from sales commissions, and “a little” from sales consulting.
The best situations for TV websites are when they go local and create new revenues from new customers, rather than bundling in existing contracts with car dealers and other traditional TV advertisers, says Yarnall. Homebuilders, real estate brokers and mortgage advertisers are examples of new customers who haven’t previously worked with TV stations. “The website clinches it. Otherwise, these guys would not have gone near TV.”
Yarnall is bullish on video streaming ads overall, but isn’t relying on them, especially in working with auto dealers. This is a dramatically different stance than WorldNow’s. The agencies that represent most dealers aren’t really convinced that video streaming is a good use of their budgets, he says. “The local dealers will never move away from (traditional) TV.”
A better source of Internet sales are those generated by the development of specialized verticals on the TV station sites, including holiday sales, wedding centers and baby centers. “These are things that people will pay for.”
BI is also providing free classifieds a la Craig’s List, using selllocalstuff.com as a vendor. Selllocalstuff.com’s “flexibility” is the key, since most stations want to customize, says Yarnall. That’s why he’s less bullish on the slotting of national verticals embraced by WorldNow and IBS for recruitment, real estate and other segments. The TV stations “want to get away from Google. They want local applications.”
Yarnall notes that BI’s approach differs from WorldNow and IBS in another important respect: it doesn’t mandate that stations provide free advertising for the website. IBS has a formula for getting free ads based on gross ratings points, but can get away with it since the stations typically have equity in IBS. “TV stations support us when revenues come in.”
My sense of all this is that TV stations could make a bigger dent in the local online advertising market. Their promotional capabilities are second to none, and the rise of broadband usage makes for cross-channel opportunities. The fact that entrepreneurial companies like BI can make good profits for the stations – even with sites that are relatively primitive — suggests real opportunities.
But let’s keep it in perspective. I don’t expect to see the Internet become a real focus for most TV stations, which are distracted by life-and-death issues such as cable carriage, digital channel development and network relations. Watch out, however, for the exceptions. I bet there will be at least a few markets where TV stations begin to run away with the local advertising market. When they do, they may find themselves being something other than just “TV stations.”
