Stations’ Road to Recovery Runs to Digital

By Arthur Greenwald

Local spending on advertising and other forms of marketing is falling sharply, hurting all local media from TV to radio to the Yellow Pages. But, when the economy finally turns around, TV stations can recover more quickly if they aggressively deploy new digital services and grab a bigger share of the dollars, according to experts on an NAB panel titled “Multiplatform TV Ad Centers.”

“Digital media is the rising star. In the next five years, traditional ad revenues will shrink by 4.5%, while digital advertising will grow by 18%,” said one of the experts, Rick Ducey, chief strategy officer, BIAfn.

While spending on traditional media will increase from $141 billion between now and 2013, he said, spending on the new media will more than double, from $14 billion to $32 billion.

Ducey’s fellow panelists included Robert Raciti, a senior VP and media analyst for GE Capital, and Christine DiStadio, director of digital media for Belo’s KHOU Houston and a well-known authority on digital marketing.

Moderated by TVNewsday Editor and Co-Publisher Harry Jessell, the panel focused on local advertisers’ shifting media priorities and the best strategies for TV stations to maintain and build market share.

The digital services can take a variety of forms, including digital broadcast channels, Web sites and mobile offerings.

Mobile might have the greatest potential for TV stations, Ducey says. Total spending on all forms of mobile advertising in 2012 will be $3.3 billion and the broadcasters should take a third of that — $1.1 billion — through their planned mobile DTV service.

BIA’s forecasts that by 2013 there will be 130 million more video-capable cellular devices, including 25 million capable of receiving the mobile DTV service. That would add one incremental hour of TV viewing per week and generate commensurate growth in ad revenue.

Despite the economic slowdown, says Ducey, the other assumptions of the forecast are being met, including the selection of the ATSC mobile TV standard, commitment of receiver and transmitter companies and major new product announcements.

Even so, cautioned GE’s Raciti, in order to reach these revenues, a lot still has to happen. “For one thing,” he said, “the carriers have not yet agreed to include a TV receiver chip in the handsets they distribute. They might want to protect their own subscription video revenues.”

While the panel was optimistic such obstacles could be worked out, Raciti emphasized that “the mobile platform presents a great opportunity, but stations can’t afford to wait.”

He added that he believes automotive and other traditional ad categories will recover, “they may never again their previous levels. Stations need to harness all available distribution channels in order to stay competitive.”

Raciti pointed to multicasting as a central strategy. That is, creating multiple revenue streams by delivering the same content on different platforms. “Stations need to think of their multiplatform resources strategically,” said Raciti. “This is about more than posting viewer clips on a Web site.”

Multiplatform advertising is already well underway at Belo’s Houston station. “At KHOU, we’re a content company,” said DiStadio. “We put it out there however we can.” DiStadio cited the station’s multimedia coverage of Hurricane Ike as “a perfect example of our strategy. We covered it on live TV, on our digital channels, live streaming video, on blogs, on DirecTV and using social media like Twitter.”

DiStadio said that strong viewer response inspired an epiphany. “We realized this wasn’t an exception. It was the new model. Now it’s a [media] hurricane all the time.”

This requires cross-training most station employees in a wide range of skills — whether in content or in sales. “We’re teaching everyone who touches copy to write beyond a TV script,” DiStadio said, stressing that the same content also has to work online and on mobile platforms.

KHOU is taking advantage of its extra digital broadcast capacity by airing a channel featuring comprehensive coverage of Houston Dynamo soccer. “We’re creating destination programming on [ch.] 11.2 by carrying 120 hours of live sports programming.”

DiStadio considers live sports content to be “TiVo-proof,” adding ”we’re training people to deal with a time-shifted audience.” The station supports the games with a highly-produced live pre-game show and a much simpler follow-up talk show with Dynamo announcer Glen Davis. “The show is just Glen Davis with one camera, and with Glen that’s all we need,” DiStadio said.

She said the next big strategic focus for KHOU is mobile video. “People carry it with them 18 hours a day. We need to learn right now how people will use and access all kinds of content on mobile.”

DiStadio already is certain that formats will emerge that will be unique to the new medium. “The Internet on mobile is beside the point. We need to rethink how it fits into the consumer’s lifestyle.”

KHOU is about to launch its own iPhone application that will handle text, video clips and other features. And DiStadio revealed that in two weeks the station will launch a series of new mobile services using “an easy publishing platform called Verve Wireless that includes text, video, SMS messaging and integrated ads.”

The KHOU sales teams “will sell everything — TV ads, Web banners and now mobile,” said DiStadio, who looks forward to future revenues from social media too. “There’s no revenue there yet,” she said, but it’s already increased the average time our users spend on our Web site.”

KHOU is also working with MojoPages, “the People-Powered Yellow Pages” as a vehicle for attracting ads from small to medium businesses that are already targeted by the traditional Yellow Pages and others. “KHOU feels that if we don’t go after this revenue it’s money we left on the table,” DiStadio said.

Ducey added that it’s foolish to dismiss such incremental revenue as “chasing digital dimes.” Rather, “you’re staking claim to this revenue going forward. It establishes your overall value to the advertiser and gives strategic direction to your whole company.”

One aspect of traditional marketing will survive and thrive on mobile and other platforms, says DiStadio. “No matter where you go in Houston, the businesses want to align themselves with 11News.” While there’s been some internal discussion about creating special branding for different media, “we always come back to our legacy brand. There’s great value in keeping that 11News front and center.”