More revenue stats from IB sites
Cory Bergman August 14th, 2008
As a follow up to a company blog post (which we reported here), Internet Broadcasting has sent out a press release comparing the revenue performance of its local sites with the competition using data from Borrell Associates. The key stat: IB-affiliated stations had an average of 61% higher revenue from online advertising last year vs. non-affiliated stations — $871,723 vs. $542,275. More data in the release…
Saint Paul, MN (August 13, 2008) – Internet Broadcasting, the leading local Internet solution provider for broadcast publishers and advertisers targeting local markets, today released the results of a custom study from preeminent local research and consulting firm Borrell Associates showing that IB-affiliated TV stations had dramatically greater revenue from online advertising than non-affiliated stations. Among the study’s findings:
* IB-affiliated stations had an average of 61% higher revenue from online advertising last year vs. non-affiliated stations — $871,723 vs. $542,275 for non-affiliated stations.
* IB-affiliated stations had 36% higher average online revenue per household in each market vs. non-affiliated stations — $.71 per household vs. $.52 for non-affiliated stations.
* IB-affiliated stations generate more local online ad revenue in each market — $.53 per household — than non-affiliated stations generate in total online ad revenue — $.52 per household.
* IB-affiliated stations had three times the national online ad revenue per household in each market — $.18 per household vs. $.06 per household.
* IB-affiliated stations had significantly greater online revenue growth projections for 2008 than non-affiliated stations – 48% vs. 35%.
“This study demonstrates that local brands win when working with IB to monetize their web sites,” said David Lebow, CEO of Internet Broadcasting. “Our partners have tremendous revenue pressure in today’s market. Our publishing platform and advertising solutions combine to create meaningful usage and revenue.”
“We’ve always advocated the local media companies not try to tackle the Web on their own,” said Gordon Borrell, CEO of Borrell Associates, “and the results of this study provide solid evidence regarding why that’s so. A partnership with a service provider like Internet Broadcasting helps media companies develop their Web initiatives into a new business line, rather than a new marketing expense.”
“Hearst-Argyle local Web sites aggregate 18MM average monthly unique visitors,” said Roger Keating, Senior Vice President, Digital Media, Hearst Argyle Television. “We have been impressed with how IB’s network has brought national advertisers to our local sites that we otherwise would not have landed. But more importantly, the advertising operations and creative services team at IB has made it relatively easy for our station sites to grow. We get to focus on building compelling content and selling campaigns to local advertisers, and IB’s full service team takes care of the rest.”
The results of the custom study were drawn from the data used to produce “What Local Websites Earn”, a study released by Borrell Associates in May 2008. For more information about the study, visit http://www.stateoflocal.com/2008/08/01/377/.
15 Comments Add your own
1. anonymous | August 14th, 2008 at 1:39 pm
No sure I am following this correctly. So IB sites generate on average .18 per TVHH for an average of $871,723. If one takes the 871,723/.18 = 4.8 million TV Households on average per station. The last time I looked there are only two markets that have a household size over 4 million.
I am not sure this is a good metric. How about a metrix showing revenue per page view or one per unique user. The bulk of the IB sites have alot of uniques due to the CNN relationship so this should help boost the number.
2. Anonymous | August 14th, 2008 at 4:03 pm
No, the article says IB sites average $0.71 per household. That gives you an average of 1,227,778 households per market. There are 21 markets larger than that.
Non-IB sites tend to be smaller, though. According to the numbers ($542,275 on $0.52/household), the average non-IB market size is 1,042,836. There are 27 markets larger than that.
There is at least one incorrect statistic in Lost Remote’s information above — non-IB sites only make $0.46/household in local revenue, not $0.52.
3. hawkeye | August 14th, 2008 at 7:09 pm
so here we all are playing with percentages because IB put out a press release.
question is not whether the larger number proves anything about the wonderfulness of IB affiliation but rather whether $871,723 is a good number at all.
Is that under a million dollars in revenue for a YEAR or for a QUARTER or for a MONTH and irrespective of time period is that a year over year number that demonstrates real growth in large enough magnitude to defend a buisness plan and proposition.
The press release and Cory’s post and the following detail and debate over with it.s .18 or or .71 or point who know what confuses the debate over the real issue: are local sites ever going to make enough money to be real businesses?
4. tdc | August 15th, 2008 at 5:36 am
sure they will, number 3. whether it’s a pure play that comes in and takes the flag is the real question.
my concern with this sort of “study” (and with all due respect to the fine folks at ib) is this study must include the nbc o&o’s which make up the majority of ib’s 1-10 markets.
with them reportedly on the way out the door, how will this effect the number when a large amount of their 41% owner’s properties are in markets 100+?
just asking.
5. Chris B. | August 15th, 2008 at 8:07 am
Ask any TV sales manager or GM of an IB affiliate and they will be the first to admit that the top line revenue number they show is complete bull s*i%. Today, when it’s hard enough to sell spot television, the web is the first thing to get discounted or bonused to the client. Rather than show a $100k ad buy, they are showing a $85k TV buy and a $15k web buy, because they are presured from companies like Hearst Argyle and the others to grow digital sales — period. “Real” Internet revenue is a fraction of the numbers that are reported. The shell game they are playing is rediculous.
6. Terry Heaton | August 15th, 2008 at 8:24 am
Food for thought. This report compares revenue at IB clients with revenue from other “non-affiliated stations,” which means IB believes the market for online revenue is limited to the TV stations in town. While it’s certainly understandable to use that as a reference point, it perpetuates the myth that our competition online is still the guys across town.
7. tdc | August 15th, 2008 at 9:23 am
even flat on your back you do “food for thought” right.
8. Cory Bergman | August 15th, 2008 at 10:57 am
@Chris: That happens at many station beyond IB affiliates. There’s a lot of fuzzy math going on. Even if you allocate dollars correctly, TV account executives, who are under pressure to hit an internet goal, will split a “convergence” campaign along arbitrary lines. This confuses the effectiveness of online advertising and reduces the responsibility of the AE to deliver for clients ONLINE. In short, it’s not a sustainable strategy and is one of the nasty side effects of using a “converged” sales force.
@Terry: Very true, although most TV stations would evaluate IB’s performance against their TV peers.
9. wtf | August 15th, 2008 at 11:10 am
@Cory & @Chris
shhhhhhhhhhhhhh! The corporate guys might be reading this!
10. Rob | August 15th, 2008 at 11:31 am
There is no way in the world that sales people are devaluing the Internet by arbitrarily assigning an amount of money to the Internet portion of convergent deals just to meet an arbitrary quota assigned by management.
There is no way that sales people, when faced with larger commissions for TV, are not going to go out and sell Internet with smaller commissions or encourage their clients to put more dollars into the Internet than TV.
On another note I think it’s great that IB totally discounts newspaper websites - and all other local media websites that aren’t tied into TV stations - as not being a factor in the battle for online eyeballs and revenue. How long will it be before they realize the web isn’t TV?
11. Cory Bergman | August 15th, 2008 at 11:47 am
@Rob: While an AE will make more on a TV sale (just because the dollars are so much bigger), many stations have instituted internet goals that, when missed, may result in the dismissal of the AE. So it’s not all about the commissions anymore — it’s also about hitting goals that guarantee continued employment.
Because there’s no way, currently, to commission AEs at the same level online as TV (in total dollars) without decimating your net online revenue.
12. Mark | August 15th, 2008 at 1:25 pm
Rob…you are extremely naive…enough said..
13. Rob | August 15th, 2008 at 6:08 pm
@Mark … Check out my personal website, which is linked to my name. Have a good one.
@Cory … True, but the implementation of sales goals are dependant on the initiatve of the GSM / LSM to enforce them or allow for the covergence dollars shellgame so AEs can focus on the current breadwinner business at the expense of the up and coming business.
14. Anonymous | August 15th, 2008 at 7:23 pm
Ten times more addictive than MARIJUANA…it’s
INTERNET MADNESS!!!!!!
(Oh god, help her she’s lost her CUMES!)
15. Rick Ellis | August 15th, 2008 at 10:14 pm
As always, my standard disclaimer. Used to work for IB, don’t know anything about their current strategy
@ Terry. I don’t read the info quite the same way you do. I think that IB focused on TV web sites not because they don’t get that there are other forces in the local market. It’s that the arguement they’re trying to make really only matters to other TV sites. They’re making a pretty specific claim. If you’re a TV web site, you’re better off being with us than not being with us. They don’t have a track record with non-TV sites, and so it’s probably pretty smart to argue that using their ad network and/or sales forces makes the most sense for TV sites.
I was just making a consulting pitch at a local TV station here which had probably a bit less than $500K in web revenue last year. If IB could convince them that they could do just the IB median annual number, they could substantially boost their bottom line without a lot of trouble. Granted, that solution isn’t as easy if you’re part of a larger station group, but there are stations that this makes a lot of sense for.
I think they do have some interesting things to offer non-TV web sites (and they are making some moves in that space). But that’s really another conversation.
The discussion about online specific vs. convergence sales is an interesting one. My experience has been that it’s a problem across the board–both at TV sites as well as newspaper and other legacy media sites.
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