A new report from MFM and Borrell Associates, Benchmarking Local Media’s Digital Revenues, examines the contributions of digital ad sales to total sales efforts at TV stations and other local media properties. And, an upcoming MFM webinar will address the question of how stations can attract more of the $50 billion projected to be spent next year on local digital media.
Boost Your Share Of Local Digital Ad Money
If your sales team was leaving significant local ad sales dollars on the table, wouldn’t you want to know? Well, according to Gordon Borrell, that’s exactly what’s happening.
“Digital Ad Sales: Are You Getting Your Share?” was the title of Borrell’s keynote address at Media Finance Focus 2014, the 54th annual conference for MFM and its BCCA subsidiary. Borrell, CEO of Borrell Associates, a leading authority on local ad spending, answered that question with a resounding “NO!”
I also expect that you are already asking the more important follow-up question: “How do we get more of the money being spent on digital?”
Getting to that answer is the reason MFM teamed up with Borrell Associates on a report called Benchmarking Local Media’s Digital Revenues. It examines the contributions of digital ad sales to total sales efforts at TV stations and other local media properties.
In addition to incorporating responses from our membership base, which includes the country’s television station groups and independently owned stations, the data was augmented with Borrell’s vast database of local market media spending by small and medium-size businesses (SMBs).
Borrell provided a first look at the study’s findings during our conference in May. We have just distributed copies of the final report to our membership. In addition, we’ve scheduled a Distance Learning Webinar for Tuesday, Sept. 16, from 2 to 2:50 p.m. ET to allow members and non-members alike to hear Borrell’s thoughts about how the results from the report can be used to create a plan for garnering a larger share of local digital media dollars.
Who is doing a better job at attracting digital media ad spending?
To put the importance of this data into context, consider this observation from Borrell during his keynote: “Pure play Internets like Autotrader.com and Angie’s List are making millions in the local ad market.”
Drilling into the market analysis, Borrell found that Internet-based media’s share of local market spending was an average of $1.4 million compared to less than $1 million for each local TV station. He noted that newspaper Web sites are doing substantially better, bringing in more than $2.4 million each.
In aggregate, the report shows pure play Internet media collects 55.9% of the total spend on local digital media. Newspapers come in second at 19.3%, which represents nearly twice as much as the 10.3% in digital media spending going to the average TV station.
Digital ad dollars are spent on marketing promotions
So, why are the pure plays and newspapers doing a better job at attracting more of the local digital media ad spend? Borrell says you need to understand the trends that are affecting how local businesses are allocating their advertising budgets.
He demonstrated that quite effectively by showing conference attendees a slide that contrasts money going into marketing promotions with money that’s spent on traditional forms of advertising.
According to the research, local advertising revenue in the U.S. has been on a downward path since 2006, falling from $139.7 billion that year to a projected $100.6 billion for 2013. Conversely, local promotional dollars climbed from $126.2 billion to a projected $177.4 billion over the same period.
The digital marketing services opportunity
In addition to spending on such options as coupons, contests, sponsorships and events, promotional ad dollars are also going toward what Borrell describes as “digital marketing services.” These expenditures include helping local businesses maintain their Web presence as well as providing marketing support, public relations and strategic consulting.
Belo’s Dallas Morning News offers one great example of how newspapers are seizing this opportunity. The paper teamed up with a Dallas-based ad agency to form a joint venture called Speakeasy that marries content marketing with social media tools.
Grant Moise, the paper’s SVP of business development and niche products, explained to our conference attendees that “advertisers are looking for compelling content to attract prospective customers to their sites, which can be fulfilled by syndicating articles written by our journalists and content experts.”
What is driving the shift away from traditional ad campaigns?
Borrell says the reason local businesses and other marketers are shifting more of their ad dollars to promotions can be attributed to the saturation of media, which in turn has led to an overexposure for advertisements.
Backing up this observation is the finding from a study by Yankelovich and ad agency BBDO that the average consumer is exposed to about 5,000 advertising messages in the course of one day. Out of those, they probably notice 285. But they are only likely to remember six of them if not less.
In addition, consumers are spending less time with legacy media. Borrell cited data from Veronis Suhler Stevenson which found the time spent with traditional media dropped by 25.6 minutes a day while time with digital media increased by 27.3 minutes over the past five years.
But while overall time with media increased by nearly two minutes per day from 2008 to 2013, Borrell doesn’t see that trend continuing. He commented to conference attendees, “If you look at our forecast for the next few years, we figure that by 2018 consumers will curtail their media time by 19 minutes. They’re going to say ‘Enough!’ ”
Fortunately, TV stations may not number among the legacy media experiencing the decline. Nielsen’s 1Q 2014 Cross-Platform Report found that Americans continue to watch more than five hours of traditional television per day — “a statistic that has remained close to flat over the same quarter for three years running.” Meanwhile, the overall time spent with television has continued to increase, including time-shifted viewing and a 30% increase in online viewing. But, that doesn’t alleviate the problem of ad saturation.
Aligning digital media sales with the market opportunity
Borrell also noted a disparity between the viewpoints of finance executives and sales personnel regarding their organization’s digital media sales operations. According to the MFM/Borrell survey, 94% of the MFM respondents, who are typically members of the company’s finance team, feel their company’s commitment to digital is strong. But Borrell says that perception is out of sync with front-line people. “When we survey sales managers and digital managers, that number is closer to 64%.”
How to narrow that gap in perceptions will be one of the major areas of focus for the September Webinar. Borrell will provide additional analysis on the companies buying more than $35 billion in local digital media this year and the more than $50 billion he is forecasting for 2015.
One of his discussion topics, which we can see reflected in the perception of sales managers, is the study’s finding that slightly more than one-fourth (27.5%) of existing customers are also buying digital. That points to a huge opportunity for selling digital media to customers that stations already know.
For Borrell, it also suggests existing sales staffs may not be adequately trained to sell digital products to those customers. And as may be demonstrated by the increasing importance of digital media services to SMBs, it may also mean stations aren’t offering the digital media services that their customers are looking to buy.
With many stations looking to finalize 2015 budgets and revenue forecasts in the coming months, Borrell’s insights on the tools sales teams need in order to get a larger share of the fast-growing digital media market couldn’t be coming at a better time.
But you don’t have to wait until the September Distance Learning event in order to begin digging into the details. You can obtain more information about what other media companies are doing to grow their digital revenues by reading the articles included in the July-August 2014 issue of our bimonthly magazine, TFM — The Financial Manager, which is currently available via our website, www.mediafinance.org. More information about the upcoming Borrell webinar is also included on our site.
You will be ahead of the game if you are a member of MFM or know someone in your company who is. A complete copy of the report is one of the many benefits MFM is offering to members in good standing this year.
Our goal in collaborating with Borrell on the Benchmarking Local Media’s Digital Revenues report was to help create an industry-specific roadmap to media companies’ share of next year’s forecast of $50 billion in local digital media spending. And the September webinar will be a great way to ensure you’re headed on the right path.
Mary M. Collins is president and CEO of the Media Financial Management Association and its BCCA subsidiary. She can be reached at [email protected]. Her column appears in TVNewsCheck every other week. You can read her earlier columns here.