local media insider

Borrell's 2010 Online Advertising Study: Broadcast and newspaper sites duke it out for online display dollars

But is that where the money is?

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Borrell & Associates released its 2010 Local Online Revenue study today, with a few interesting trends.

Television sites gained about 1.1% market share of local online advertising dollars away from newspaper sites last year, and 22 broadcast sites are larger than print sites in the same market.  The total is a little misleading however. Most television sites struggle to achieve a paltry 1% of their market, while a few have broken into the 4% range and up, with one as high as 18% of the market. 

The success of television sites has come from  more aggressive display sales efforts, and from implementing classifieds platforms. Surprisingly, however, newspaper sites sold more video ads, mostly around sports coverage (supplemented by companies like Cinesports) and video recruitment ads.

A startling statistic is the performance of Groupon and Autotrader.com, which had more revenues than the largest television or newspaper site in 22 of 200 markets. Groupon sales top $10 million in several independent markets. 

Pureplays overall as a category were flat in terms of marketshare, with 50% of the market, of which 70% is local search. However, Borrell doesn't expect these companies to stay flat for long. 

Borrell also commented that between the "best and the rest" of legacy media selling digital is not a difference but a "canyon." 

They sited a couple of ways to determine where your company fits in the pack, besides simply looking at what the percentage of digital legacy revenues, typically for a newspaper today running at 10% up to 18%, in the case of the New York Times. 15% is still considered very good, a level achieved by McClatchey and the Washington Post.

First, looking at total digital revenues as a percentage of the whole digital market, here's a breakdown of television sites by market size:

Print companies can also use revenues per unit of circulation (online revenues divided by daily circulation) as a gage: 

Smaller newspaper companies are getting just 1% of their market share, on a par with television sites. It just doesn't look good. So what do the top digital sellers do right? Here's the top five things, according to the new Borrell report:

1. They sell multiple products (deals, mobile, etc.) not just banner ads.

2. They have at least two digital-only sellers.

3.  Clear and ambitious online revenue targets, like "double in two years" rather than incremental expectations.

4.  Development is revenue focused; doesn't drift into initiatives like traffic building that are not tied back to revenues.

5. Head of interactive - typically - reports to a CEO rather than a publisher or legacy general manager.

None of this should be surprising by now. Small newspaper companies and television stations should take note of how quickly the world can change, and yes, it will find you in your tiny outpost upstate somewhere.  If you are reading this site, chances are your company has undertaken this difficult, laborious journey. Keep us posted!