After years of relative sluggishness in developing an online presence, TV and radio broadcasters are beginning to generate a significant portion of their revenues from online ad sales. Broadcasters could collect nearly $2 billion in revenue from online ad sales in 2013.
According to research firm BIA, radio and TV stations pulled in a collective $805 million in online sales in 2008, which accounts for 7.3 percent of the total $11 billion spent on Internet ads last year, according to The Kelsey Group, the advertising- and media-focused subsidiary of BIA.
Last year was the first year BIA collected data, making it impossible to compare the performance to previous years. But Mark Fratrik, VP of the BIA Financial Network and an observer of broadcast ad sales, said the industry is just now getting aggressive about digital.
“Unlike newspapers, who started getting serious online five years ago, broadcasters have just started to get serious,” he said. “I’d say they are lagging, but they are turning it around.”
Of the $805 million earned online last year, BIA estimates that $342 million of that belonged to radio and $463 million to television. The estimates are based on industry-wide surveys, examination of public company documents and discussions with industry owners and insiders, the company said.
Based on the 2008 numbers, BIA estimates a compounded annual growth rate of 18.6 percent over the next four years, with broadcasters reaching $1.9 billion in revenue from online ad sales in 2013.
Given the challenges facing broadcasters today — the proliferation of new channels and the migration of advertising dollars to the Web, for example — Fratrik said it is vital that the industry continues to be aggressive about developing an online presence.
Too many broadcasters still “think of the Internet as an add-on, but they have to think of themselves as local entertainment and information providers with various avenues of getting that information and entertainment out to the public,” he said. Fratrik added that broadcasters are in a good position to take advantage of local advertising markets online because “they know the local advertisers; they have their feet on the ground.”
Indeed, a 2008 study from Sterling Market Intelligence suggested national brands were struggling to tap into the local advertising market, in part because of the need to tailor their messages to suit the varying needs and mindsets of different regions.
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