Media companies that sell ads to local advertisers have lots of incentive to ramp up their online ad sales efforts, and according to a new report by Borrell Associates, some are getting pretty good at doing just that. Last year $12.6 billion was spent in online advertising by local advertisers, and while much of those revenues went to Internet companies with no ties to “legacy” media (yellow pages, newspapers, radio and television), the share was lower than in the previous six years since this annual report was first issued.
According to Borrell’s report What Local Media Websites Earn: 2008 Study, newspapers have arrested their online share decline, and are now taking 28% of the local online ad dollars. A report on this study in Mediaweek points out that radio stations saw their local Web revenue go from $189 million in 2007 to $220 million in 2008, an increase of 16.4 percent. Borrell projects 26 percent growth for 2009, which would bring the industry to $277 million in local online advertising.
Even with those healthy increases, radio manages to take only 2% of the local online ad dollars, compared to 11% for directories (yellow pages, etc), 9% for tv, 3% for magazines, and the above mentioned 26% for newspapers. While newspapers now see 7% of their gross revenues from online sales, tv and radio see only 3.4% of their gross revenues from online sales.
Legacy media companies are positioned well to continue to grow their share though, given that they have an important asset in their local sales staff. Borrell estimates that to be 98,000 people on the street with existing relationships with local advertisers. The key is teaching them to effectively cross sell the traditional and online platforms.
Newspapers have been dedicating substantial resources to their websites and online platforms for many years, so it’s not surprising to see that they lead the pack of legacy media companies in terms of share. Some radio stations have begun to build online platforms that are more than logos and personality pictures, but too many stations have not yet begun to dedicate the resources necessary to create the kind of content rich online platform that is necessary to compete for local online ad dollars. The time to do that is here.