Report Highlights Digital Ad Sales Opportunities

RADIO ONLINE | Friday, August 22, 2014

Most local radio, TV and newspaper outlets are leaving money on the table by not focusing on digital media when selling advertising to local businesses. That's one of the finding in a new joint research study conducted by the Media Financial Management Association (MFM) and Borrell Associates. The just-released study, "Benchmarking Local Media's Digital Revenues," was designed to provide an analysis of current digital ad sales efforts that is coupled with Borrell's latest advertising estimates for local markets.

The MFM-Borrell report focused on the 36% of all advertising that is placed in local markets across the U.S. In 2013, according to Borrell's research, the amount spent by local businesses in their markets amounted to $97.3 billion of a total $268.7 billion. Of that amount, $24.7 billion went to digital media, representing one-fourth of all local ad expenditures. Borrell says the market is on track to increase local digital ad spending by 42%, to $35.2 billion this year. The research firm is projecting additional growth rates of 44% in 2015 and 37% in 2016, which would mean nearly half of all local ad dollars will be spent on digital platforms within the next two years.

Numbering among the challenges for so-called "legacy" media, such as local newspapers and radio and television stations, is Borrell's finding that in excess of 50% of current local digital media spending is going to "pure-play" Internet media enterprises. The Borrell-MFM benchmarking report validated this analysis, finding that digital media sales as a percentage of total ad revenue currently stands at 12% for print media and 6% for local broadcasters.

Significantly, the benchmarking survey indicates that slightly more than one-fourth (27.5%) of a local newspaper's or broadcaster's existing customers are also buying digital products as part of their ad spend with the media outlet. This finding highlights the huge opportunity for selling digital media services to the three-in-four existing customers that aren't currently buying digital media.

"When we spoke with MFM members this spring, many indicated that they were forecasting digital ad sales would grow to represent 8 to 13 percent of their total ad revenues next year, which suggests they are leaving a lot of money on the table," said President/CEO Mary M. Collins of MFM and BCCA. "Arriving in time to impact digital ad sales budgets and strategies for the coming year and beyond, our benchmarking report and upcoming webinar provide a roadmap for ways local media businesses can take advantage of their reputations and relationships to grow those digital revenues by a substantially larger margin."