I attended a presentation made by Gordon Borrell of Borrell Associates (http://www.borrellassociates.com/) at the Virginia Association of Broadcasters convention this weekend. The foundation for Borrell's research is "following the money;" they determine how much local advertisers actually spend in local interactive media.
According to Borrell, the local interactive market is $12.7 billion and showing explosive growth. The market is shared as follows:
Pureplay - 47.6%
Newspapers - 26.4%
TV - 8.6%
Radio - 2.2%
Display ads are not fairing particularly well, peaking last year at $6.5 billion. The growth categories include email, search (directories), and video.
Borrell stated his premise that the Internet is "more a commerce medium than a news medium." He also is of the opinion that "Yellow Pages and direct mail are in free-fall."
Legacy media companies are growing at 19.2%, while the pureplays are growing at only 1.9%. Examples of 2008 online revenue growth rates for local media companies include:
Nexstar Broadcasting - 100.0%
LIN TV - 61.0%
Gray Television - 24.8%
Belo Corp. (TV) - 23.0%
Gannett (TV) - 13.0%
Media General Interactive - 7.7%
Radio broadcasters generated 2.4% of their 2008 gross revenue from local interactive (though Emmis Broadcasting did 5.1%, clearly ahead of the curve). TV broadcasters did 3.4% of their revenue from interactive.
In markets 1 - 20, TV did an average of $1,365,505, while markets 101 - 210 averaged $266,663.
Using Hampton Roads as a sample market, internet usage in the past month broke out as follows:
- Sent/received email - 60.5%
- Got weather reports/information - 32.7%
- Got news - 28.4%
- Paid bills - 27.5%
- Downloaded music/listened to audio clips - 17.7%
- Made travel reservations - 17.1%
- Got Financial information/services - 16.6%
- Looked up movie listings - 16.5%
- Used Internet yellow pages - 16.2%
- Used Instant Messageing - 15.9%
Borrell stated that the average interactive sales rep bills $250,000; more sales reps = more revenue.
It was an interesting presentation, providing a good glimpse into the bright future for local interactive sales if the broadcasters will jump on the bandwagon. Thanks to Gordon Borrell for providing the information, and the Virginia Association of Broadcasters for the forum.