Making The Most of Mobile

When TV station executives talk to Gordon Borrell about mobile’s growing dominance — and how it could impact ad revenue — they often vent this fear: Just as broadcast dollars turned into digital dimes, digital dimes could shrink into mobile pennies. So Borrell keeps a single-panel comic handy, one he concocted with the help of a cartoonist. It goes like this:

Two folks stand in a graveyard, gazing at the tombstone of a salesman who coined the term “stepping over analog dollars to pick up digital dimes.” “What happened?” a woman asks. A man replies: “Couldn’t figure out the elevator controls in the digital dimes building. Had a heart attack climbing the stairs.”

“In 15 years those digital dimes added up to the biggest budget for small and mid-size companies — a lot more money than they spend on radio or TV — and these salespeople still don’t believe it,” says Borrell, CEO of Borrell Associates, a company that gauges media ad spending in local markets. He predicts the mobile skeptics of today will look as dumb as those who declared TV unprofitable in the late 1940s, or FM radio a revenue bust in the 1960s.

How mobile will realize its gold mine potential isn’t clear. But this much is irrefutable: TV stations now see more than 50% of their overall digital traffic coming from mobile sources such as smartphones and tablets. And those who long predicted mobile dominance, even the platform’s most bullish boosters, didn’t foresee a tipping point that coalesced not over years, but in roughly 14 to 18 months, experts say. 

Break it down to dollars and it’s enough to boggle the brain. Borrell forecasts (as reported by NetNewsCheck in June) that local mobile advertising will more than double this year to $3.2 billion, from $1.5 billion last year. If those are “mobile pennies,” quite a few broadcasters would gladly scoop them up.

And so as mobile rises in popularity, TV stations are mobilizing, if you will, to meet the needs and wants of viewers in a variety of ways.

From smartphone apps that deliver up-to-the-minute news and weather updates to the promise of geofencing — a new retail strategy that targets messages on a mobile device to a specific geographic area — station groups and executives have reason to believe they can be leaders on mobile rather than followers.

“We’re clearly in the year of mobile-first at this point,” says Ron Stitt, VP of digital media and Internet operations for Fox Television Stations. “Very quickly it’s become the primary channel, and in my mind we have to start thinking beyond platforms and start thinking of the consumer: who they are and where they are geographically.”

Robb Richter, SVP of digital at LIN Media, wholeheartedly believes TV stations can take advantage of the prospects presented by geofencing, though when asked to elaborate, he says that LIN is “developing the playbook” and declines to go into specifics.

“We look at ourselves now as a multi-screen company, not a TV company,” Richter says. “It’s about getting our content out to a user on any screen that they’re on: laptop, TV, mobile phone, tablet, you name it.”

What’s more, mobile doesn’t subtract from a TV station’s audience, experts say, but has much potential to build it. That’s because mobile apps, text alerts and the like allow viewers to stay connected to their station around the clock, no matter where they are. And that enhances station loyalty, as consumers engage more with a station’s news and information content, not less.

“You add mobile plus tablet, and the net effect is not a substitutive choice,” says Jed Williams VP of strategic consulting for BIA/Kelsey, a local media and advertising consulting firm. “For me, the morning may start by glancing at the mobile phone, then hopping in front of the TV to catch local news. Then I get behind the wheel and use mobile again, then I’m on a laptop or desktop at work. Then at the end of my day, it may be a lean-back experience with a tablet. The net effect is a very positive story for TV stations: There is more interest in content and information than ever.”

That said, why is this a positive? As Williams puts it, mobile is a platform that loves video content. Today’s smartphones do what yesterday’s flip phones could not: They stream video, and do it fast. This should make TV station groups very happy.

“Video will always be the killer app, or the killer experience,” Williams says. “That doesn’t get disrupted by the mobile experience; it just offers another platform. They have to think about new ways to package video, get users to interact with it, and get advertisers connected to it. But who’s better situated to do that than TV stations? They are visual storytellers, and that doesn’t change with new channels and new media.”

Yet smart executives still puzzle over the mobile revenue picture every day. The strategy is still evolving at Tribune Co. in Chicago, which bought 19 TV stations from Local TV Holdings for $2.7 billion in cash in June. That’s a big investment in TV, and mobile will play a crucial role in getting the return.

“It’s no secret that mobile monetization is still a frontier, and mobile advertising rates are lower than they ought to be,” says Jason Jedlinski, VP of digital products and platforms at Tribune Broadcasting.

“So we’re doubling down on creative solutions that go beyond the mobile banner: things like sponsorships, pre-roll, native solutions and branded content integration. Just like the newspaper article isn’t the best format for mobile storytelling, we know we can do better than those ‘french fry’ ads stuck to the bottom of many mobile websites.”

If ad presentation has to change, though, the way forward still represents a work in progress.

“Now that our content plays everywhere, we’re focused on making our advertisers’ messages similarly adaptable [via] integrated marketing,” Jedlinski says. “Especially on mobile, we see enormous opportunity to creatively present content marketing and advertising outside its traditional box.”

One example involves carousels: those packages of content where each picture takes a set position in a circle that users can easily spool through.

“We just added a sponsorship opportunity to the third slide of our carousel, which lets advertisers be featured much like our news content: with a captivating image and a headline,” Jedlinski says. “We hope that brands use the space to educate or entertain users, and we’ve got the resources and talent to collaborate with them to produce original content, if they need it.”

Yet if mobile exists as a growing home for marketing content and advertising, many station groups resist cordoning it off as a separate revenue category.

“It’s a red herring to talk about mobile like a third or fourth silo,” Stitt says. “It’s not about devices, it’s about people. It’s a consumer focus as opposed to a technology focus, and you tailor it in terms of where they are.”

Stitt says Fox stations are doing “extraordinarily well” with their standalone apps for weather, with some stations (such as KFDW Dallas) attracting 600,000 viewers, especially when big storms bear down.

But turning mobile viewers into mobile dollars still poses a challenge: “You have a lot less real estate to play with, so we’ll have to get a lot more creative than just running display ads,” he says. “If ad dollars were following faster, there’d be more investment. But we have to do it anyway and trust that if we serve the audience, the advertisers will follow in the end.”

Here’s what could sway them: Mobile devices move in space and time, allowing broadcasters to track users, and pull off some stunning ad feats as one swings from one neighborhood to the next.

Borrell points to what may be the next big thing: Geofencing. “If you have an affinity for a certain store, and you come within a mile or 100 yards of it, it can send you a message,” he says.

He cites a San Francisco company called Placecast that ran a promotion with a Lands’ End store in that city recently. A bulletin went out via mobile, and the results make Borrell laugh in admiration:  “Eighty percent of the people who saw the message went in the store. And 60% of those people bought merchandise. Direct mail campaigns have a 1% to 2% response. It was amazing.”

Meanwhile, companies like LIN are betting big, making a sizeable investment in a cross-platform universe. “We’ve bought six companies, and we did that to build the digital ecosystem, to serve our audiences content and revenue on a broader basis,” Richter says.

This spring LIN acquired a major creative and technology shop in Los Angeles, HYFN, with a team of 30 engineers. Come Labor Day, all of LIN’s mobile apps for broadcast will get a facelift, including those from 18 TV stations LIN bought last fall. At the same time, LIN will step up the profile of its LIN Mobile division, following a soft launch in 4Q 2012.

LIN Media’s digital-mobile investment adds up to more than $100 million in the last several years. But has it produced results? In LIN’s last earnings call, CFO Richard J. Schmaeling predicted that the company’s digital side will reap $100 million in revenue in 2013.

LIN isn’t saying how much of the digital revenue comes from mobile or what kind of return it is getting from it.

“For us, it’s about not giving in to the temptation of ‘I have to monetize this because I have someone telling me I have to, or I feel I have to,’” Richter says. “It’s really important to do this the right way, and I’m a big proponent of avoiding the same mistake the industry made seven to 10 years ago with digital. I refuse to take us down that road.”

That mistake, as he puts it, was to sell TV content on websites for “nickels and dimes,” he says.

Turning mobile into a winning business will depend on solid analytics, Richer says.

LIN created its LIN Synergy Map to give advertisers hard numbers on who’s watching mobile sites, where those people are — and even what device they’re on. “The more attributes you attach to that person, the higher the price, and the more you aren’t just spraying something out and hoping it sticks.”

Richter also has the competition to think about. After seeing a spike in its mobile traffic past that 50% mark, Belo Corp. has moved aggressively toward bolstering mobile content.

On the revenue side, last November Belo launched ScreenShot Digital, a digital advertising company with an initial staff of 13. It’s looking outside Belo’s 15 TV markets for new sources of digital revenue on mobile, providing a mix of strategy, execution and analytics.

And at Media General, a whopping 57% of digital traffic in June came from a mobile suite that includes mobile Web, news apps and weather apps, says Andy Lobred, VP of digital media.

“We’re focusing on site search on the mobile device; if you’re at an airport and looking for information on the weather, and you have a good experience, you’re going to return.”

Clearly, an ostrich approach to mobile isn’t an option. Speaking to NetNewsCheck in May, the digital chief of Post-Newsweek Stations invoked the newspaper industry as an example of how things could go wrong.

“The [stations] that today are making changes in the way that they do business are hopefully going to avoid what happened to newspapers,” says Catherine Badalamente, VP of digital media at the six-station group. She called for differentiating mobile content and experimenting with its ad forms, and mentioned a source of healthy competition in the mobile sphere: fast and flexible digital pureplays.

“They might not be creating the same content as you, but they are competing for your users’ attention,” Williams says. “And users will make selections about the choices that are most delightful for them, and help them make decisions that are useful. Vertical sites can help consumers learn more about automotive, or travel, than just a general use site.”

He added that for TV broadcasters, time is of the essence, in more ways than one: “Mobile users are making quick decisions about which content to consume, and which ones to skip,” he says. “A mobile user expects a much different experience than someone sitting in front of a TV for two hours.

“People have an incredible amount of info available to them; much more so than even a decade ago,” Borrell says. “The problem is how do you break through, especially when people are not looking up and around at billboards anymore? Here’s how: They’re looking down into the palms of their hands.”

This story originally appeared in TVNewsCheck’s Executive Outlook, a quarterly print publication devoted to the future of broadcasting. Subscribe here.