The CEO of the Web service provider Internet Broadcasting advises TV stations to build the best breaking news sites they can, then “verticalize” with specialized content that brings together advertisers in categories like health and auto with targeted consumers. He also says not to worry about the national portals taking over the local online market — they don’t have the content and advertiser relationships broadcasters do.
TV stations have been operating local Web sites and trying to squeeze revenue from them for well over a decade now. But David Lebow believes the real action in the burgeoning local online market is just beginning and that broadcasters’ chances of being the dominant players are as good as anybody’s.
As president and CEO of Internet Broadcasting, Lebow wants to improve those chances.
Based in Minneapolis, IB is a provider of content management and advertising tools and specialized content for station-owned Web sites. It’s also the operator of a national ad network that ties together more than 1,500 local sites and gives advertisers easy access to them.
IB takes care of the Web needs of its three equity broadcast partners — Hearst Television, Post-Newsweek Stations and McGraw-Hill Broadcasting — as well as others, including Cox Television and Meredith Broadcasting.
In this interview with TVNewsCheck Editor Harry A. Jessell, Lebow advises TV stations to establish a solid Web foundation of breaking news and weather and then to built on it with health, auto and other “vertical” content. He also reassures broadcasters, saying that they have little fear from national portals. They may have designs on the local markets, but they don’t have what broadcasters do: the local content and long-term relationships with local advertisers.
An edited transcript:
Your business centers on the local online marketplace. How do you assess the health of that marketplace right now?
The online business is faring better as a whole than the offline advertising business. It’s been a rough year for everybody from an ad standpoint, but we’re starting to see a lot more activity in the market. There is cautious optimism right now.
So where is the upside in local online? Is that coming from national or local advertisers?
The money is coming from everywhere, but it’s all directed at local. So whether the advertiser is a local car dealership or a national advertiser that’s looking to reach people in a certain geography, there is no doubt that all arrows point to local. Whether that advertiser is actually in the market or out of the market is not the question. All advertisers are looking to have a better local presence and target the consumer as close to the purchase decision as possible.
The technology and the measurability of the Internet allow the advertiser to really target in a meaningful way and who they’re targeting is the local consumer. Broadcasters are actually in a good position long-term because they have these powerful local franchises. They can benefit from these national advertisers who want to reach the local consumers.
People have been talking about this great advantage that broadcasters have in the local online marketplace for years now, but they don’t seem to have taken advantage of it.
It’s still early in the game. It’s really early in the game in terms of how the online dollars are getting directed in local markets. Broadcasters are really starting to ramp up their digital efforts to take advantage of their position. It’s been coming for a long time, but, like any major shift in technology or spending, it happens over long periods of time and usually the technology is out ahead of the content, which is out ahead of the advertising.
But haven’t other players like newspapers moved ahead of broadcasters in the local online market?
The newspapers certainly got into it early. There are fewer of them so their market hasn’t been as fragmented, but, at the same time, I believe television, with its ability to produce content, has some inherent advantages over the long-term.
So what’s your best advice to TV stations on what they should be doing on the Web in terms of content?
The breaking news aspect is important. It’s the franchise that has built a lot of the leading television stations and, even in the down economy, they have big advertising businesses. These stations should not abandon that franchise, but rather maintain it, build on it on the Web, build on it on mobile and then complement it with vertical content. They need to have enough vertical content — health content or auto content, say — to satisfy advertisers. That’s equally important.
So you’re saying having one site with these vertical elements within them. At what point do stations create second and third sites to go after verticals like health and auto?
I can’t say when, but ultimately in a world of specialists, we see a world where a station might have four or five different sites in a market based on certain verticals. We see that with our partners who are verticalizing their weather now.
Are you talking about Post-Newsweek and its justweather.com sites?
Yeah. They still have weather on their home sites, of course, but, at the same time, they’ve got justweather in each of their markets. It’s done really well for them.
What are the other verticals with potential?
Certainly we think health is one. Auto, even given the tough time of the last couple years, is going to come back. We’re also seeing a lot of interest in professional and personal services — medical, legal and so on.
Do you think the NBC stations are off base for abandoning news and going to lifestyles sites?
I’m not going to say they’re off base. It’s really an experimental time. People are trying to figure out how this works and so I think all these attempts are worthwhile. History will end up proving it out one way or the other.
Is sports lost as a vertical to TV stations now?
I don’t think so. ESPN is obviously great in sports and is trying to make some inroads locally, but in every vertical — weather, news, you name it — there are major national players and that doesn’t mean that it’s lost locally. Hyperlocal is also important and it could work for sports.
Some groups, including Belo and Hearst, did try to do hyperlocal high school sites with scholastic sports, but none seems to have gotten much traction.
There’s a scale issue there too. Can you do it in one market? Can you do it in 10 or do you need to use your TV brand on a platform that has scale across 200 markets. I don’t think anyone has had an out-of-the-park home run yet on high school sports, but I don’t know that it’s been done the way it will ultimately be done.
The likes of Google, Yahoo! and AOL are fishing for local advertising dollar with their sites. Aren’t they in a position to wipe out the local legacy media folk?
I sure don’t think so, no. The national portals are essentially major networks online and in no way do they replace the relevance of the local broadcaster to with local consumers and advertisers. What has to get figured out is, where is the network effect and where is there the value of being the local specialist. I think that they’ll end up working together in some way.
CNN is a company that beautifully understands the relationship of national and local. CNN is a national brand and they have a content sharing and distribution agreement through Newsource with many local television stations. They have a great understanding of what it is that the local station is the expert on and where they can add value. They’ve really figured out how national and local work together on content.
One could have looked at this 20 years ago and said, ‘Well, isn’t CNN going to wipe out the local stations.’ Quite to the contrary. They figured out how to enhance each other’s brands.
What do the local guys bring to the local online market that the big national guys don’t?
They bring content. They bring trusted brands. They have advertising relationships. The primary way an advertiser reaches a consumer in a market is on a TV station or a TV Web site.
Do you see the big boys actually putting sales people on the street in local markets?
I don’t at this point. That’s a bigger project than it might appear to be. The value of having a local sales staff is tremendous and it’s a pretty hard business to get into. When people have a local sales staff, it’s really prized and valued. It would be very difficult for a national company to go pop a local sales staff into a market. It would be competing with people — the Hearsts, the Post-Newsweeks, the McGraw-Hills — that have dozens and dozens of local advertising relationships built up over many years. That’s something that doesn’t get turned upside-down.
You compete for Web development business with several other companies including WorldNow, Inergize and Broadcast Interactive Media. Do you expect a lot of churn in terms of which companies TV stations are using for Web services?
The biggest thing stations do today is DYI — do it yourself. It’s not like we have a number of stations and our competitors have 10 times that number. What you still have is a lot of people who are doing their own sites in house because they have done it that way historically for various reasons. The biggest upside for us is for people to realize there are companies like ours that have a network effect and other scale.
So it’s not a zero-sum game yet.
Not even close. There’s a lot of growth potential within broadcasting. For us to broaden too much rather than focus on our core would not be wise. The TV business is undergoing a dramatic transformation. If we can aid in that, that’s enough work for a couple of years. To expand before that is all going in the right direction and working would be premature.
But there are a limited number of TV stations. Where do you go from there in order to grow?
To be determined. As I said, right now I think you have to be good at the first thing before you can attempt the second thing. The TV business, which has been our primary customer base since the inception of the company, is in a state of transformation and I do think the TV business is going to organize around one or two or three companies like us.