Make Peace, Not War, With Facebook

Local broadcasters, we need to talk about Facebook.

Let’s begin with a threat assessment. BIA/Kelsey forecasts $46.31 billion in local digital revenue (including mobile) for 2017, according to Mark Fratrik, SVP and chief economist. He says 26.4% of that pie will go to Facebook and Google alone, about $7.7 billion of which will be Facebook’s share, and it’s only just getting warmed up on the local advertising front.

Media analyst Gordon Borrell notes that 35% of Facebook’s current revenue is now likely coming from local advertisers, a number that’s creeping closer to 45%.

OK, but companies like Facebook and Google sell digital advertising, some broadcasters will retort. We sell television ads, and maybe 5% of our overall revenue comes from digital. How exactly is this a problem for us?

Well, if you want to take the really myopic view, then maybe it’s no big deal. As Borrell points out, the typical TV station has billing relationships with just 5%-6% of the advertisers in its marketplace. That’s pretty much the wealthiest 5%, but still, 95% of a market’s advertisers is a lot of business to turn your back on.

“The problem for television stations is they’re not accustomed to dealing with smaller amounts of money,” Borrell says. “They turn their noses up at it, and unfortunately, some of those advertisers are not so small.”

Facebook, on the other hand, has no such problem. And in the last year or so, it has rolled out a series of tools that make it really, really easy for those advertisers to get cooking. SMBs have already been savvy for some time to social media — they see the advantage of posting content — and offers — to their pages, and now for relatively piddling amounts, they can boost those posts to ensure all their friends and followers see them. They get quick notifications about the performance of their posts. They see a difference being made for just a small expense.

But these are not our advertisers, broadcasters shoot back. We aren’t in this game at penny ante stakes. These are apples and oranges you’re talking about.

Except maybe they aren’t.

Perhaps this isn’t really about pricing right now, Borrell argues, but more about effect. Let’s say a local advertiser spends $1,000 a week on Facebook — peanuts on a TV scale — but they start to see a lift in their sales activity. Meanwhile, they’re spending $10,000-$20,000 a week on TV ads, and the ROI there is murkier.

TV ads are a big-ticket item. Facebook ads aren’t. But once advertisers start getting a whiff of success from the latter, the prospect of moving some dollars away from their biggest advertising expense becomes more plausible.

Now, let’s be clear: TV advertising is not significantly threatened by Facebook at this moment. That threat is being most directly absorbed by other kinds of digital advertising. Think banner ads or keyword searches. Think of your woebegotten friends in the newspaper industry, whose incremental digital sales growth can never get nearly large enough to stem their legacy ad losses.

No, broadcasters, you are nowhere near close to staring into that same abyss.

And yet. Some of your advertisers are getting a little wary. A Borrell survey of almost 1,600 local TV advertisers from last fall found 77% of them were spending money on Facebook. Half of those found their Facebook advertising to be very or extremely effective, and 94% were satisfied with the money they were spending on Facebook.

And here’s something small, but significant: 5% said they plan to eliminate TV advertising this year, and 19% said they planned to decrease it. Take it from newspapers: what begins as a haircut can turn into a guillotine when you’re not looking.

Lest we turn this into a bogeyman, however, every analyst I’ve talked to about this stresses the upside for the forward-looking among you.

“They’re a threat, but they’re a potential threat that you can work with,” Fratrik says.

Peter Krasilovsky, an analyst who follows local marketing, points to one strong example of “co-opetition” between local broadcast and Facebook. “Some broadcast groups like Nextstar have actually done a really good job of leveraging social media tools and channels to bring more relevancy into their news coverage, get people back to their websites and give their agencies a more complete picture to sell,” he says.

Borrell advises that broadcasters stop looking at Facebook as a competitor and instead see it as a “sticky complement” to their advertising.

That starts with understanding that your advertisers already believe in the power of social media. They love it. So, “if a broadcast rep goes in there and pisses on it, they may leave without getting the buy because the advertiser knows it actually works,” Borrell says.

Here’s the alternate scenario: a rep approaches an advertiser and says, “I see what you’re doing in social media, and it’s great. You can really magnify that with broadcast promotions, and we can help develop a campaign that complements your Facebook strategy.”

The broadcast reps don’t look out of touch to the socially-savvy advertisers in this scenario because they aren’t. They’re recognizing the ineluctable power of Facebook, but they’re channeling their own brand to be seen as its master. The tail isn’t wagging the dog.

“A company that exhibits a strong basis of understanding in digital media, and specifically social media, has a better chance of retaining broadcast dollars and reaching out to people who don’t advertise in broadcast and expanding their customer base,” Borrell says.

Broadcasters can ignore this if they like and still sleep snug in their beds for now.

But while they slumber, Facebook is probably continuing to innovate a lot faster than they are. It’s tightening its bonds with local advertisers with ever-improving tools and targeting ability.

In doing so, it’s shaving off flakes from broadcasters’ slices of the local advertising pie. And those are starting to add up to something meaningful, especially for Facebook’s bottom line.

Michael Depp is TVNewsCheck’s special projects editor. His column on the nexus of old and new media will appear regularly. He can be reached at [email protected].