Report: ‘Convergence’ beginning to slow online sales

Cory Bergman June 5th, 2007

The latest Borrell Associates report is out (earlier preview here), and it predicts local online advertising will reach $7.5 billion, a 31.6 percent jump over 2006. There’s a key paragraph from the executive summary:

“Amid the mad scramble (to drive revenue online), the greatest friction is within media companies themselves. While web managers pursue faster growth by pulling away from their parent organization and by tackling online-only sales, existing print and broadcast sales managers are clamoring to pull them back — online programs provide the sizzle that they hope will re-engage fleeing advertisers. But ‘convergence,’ once the buzzword around which many new media efforts swirled, is beginning to slow online sales as the pool of prospects among existing print or broadcasting advertisers is drained. Pursuing non-traditional advertisers is becoming the route to growth.”

While online media — both in sales and content — has an overlap point with broadcasting, web managers should not be restricted by broadcast thinking. The more I talk with smart web managers in broadcast companies, the more I realize they’re becoming stifled to the point of endangering those companies’ success online. Yes, TV sales and news departments should become “platform agnostic,” yet in the meantime, we can’t let this slow, painful cultural process hold back our growth demands online. Most of the growth opportunity online has nothing to do with TV news or TV sales, and TV websites only hold a 7.7 percent share of local online ad dollars, according to Borrell. As I’ve said time and time again, hire smart web people, empower them, hold them responsible for results and get out of the way. Or they’ll end up leaving broadcasting for pure plays that will devour your revenue.

Adds Jason in comments: “I think that the Borrell report is tainted. We are having a blockbuster year with combined online and convergence sales up 62% over last year. This is with a multi million dollar base. Everyone has seen the reports that the combination of TV and online has more impact for advertisers then pure online. Stations need to look at what they are selling and how they are selling. If you target niche market opportunities as we have seen in Cory’s most recent listing of special products you will have significant success. The trap that we fall into is to play the pure play game. The best approach is to look locally and to develop a plan that fits the profile of the station and can deliver to the needs of the advertiser.”

Adds Cory: Good points. I think there’s a balance — “convergence” packages are still important — but right now the balance in the industry leans heavily towards a broadcasting-package sales approach. As advertisers become more sophisticated, they’ll demand results online in the same ballpark as our pure play competition. There are tremendous opportunities in paid placement/local search, video classifieds, advertorial, lead generation and self-service, yet these have little to do with broadcasting other than the promotional power to get new initiatives noticed.