Digital Innovations in Local Radio & Television (BIA/Kelsey Presentation to TAB 2014)

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Every broadcaster recognizes that digital media technologies are transforming the business. Its a gold rush to win the billions of dollars available in digital ad revenue. The key to success? Cross-platform digital strategies that offer advertisers and consumers valuable integrated solutions. This presentation, made to the Texas Association of Broadcasters 2014 Convention & Trade Show, discusses how radio stations can exploit their local promotional appeal and local sales force to produce cross-platform campaigns that add significant value to a stations digital business. The session, expanded on the following topics: Local Market Forecast. Where will local radio and television be in five years? We will share findings from our national and local ad forecasts and examine where the top five business categories are spending dollars. Ad revenue drivers. Small and medium-sized businesses (SMBs) are becoming the backbone of todays local radio and television advertising revenues. We will discuss how to capitalize on this trend and drive revenue. Cross-Platform Selling. Small businesses are moving their advertising to the Web. Radio and television broadcasters are uniquely positioned to serve SMB accounts on air, online and on mobile. Well share what stations must do to mobilize their local sales force so they have a full understanding of the digital elements necessary for a successful campaign. Mobile. More Americans are using their mobile phones as their primary source for news. Well share findings from our own consumer shopping research and discuss the top three ways broadcasters can tap into this opportunity and leverage their news content on mobile.

Transcript

  • The Local Media &Advertising Experts Digital Innovations in Local Radio and Television Mark R. Fratrik, Ph.D. Senior VP, Chief Economist, BIA/Kelsey Texas Association of Broadcasters August 7, 2014
  • 2014 BIA/Kelsey. All Rights Reserved. 2 BIA/Kelsey at the Center of Local BIA/Kelsey is the leading research and advisory company focused on the local advertising marketplace. Our goal is to help companies leverage the exceptional business opportunities in local media to solidify their leadership position. Our research-driven data helps our clients make the right decisions, every day. Industry Forecasts Local Market Ad Reports Consumer Research Advertiser Research Mobile, Social, Video Trends U.S. Local Media Forecasts
  • 2014 BIA/Kelsey. All Rights Reserved. 3 2014 BIA/Kelsey. All Rights Reserved. Overview of Talk Local Media Market Forecast: Where will Radio and TV be in 5 Years? What will be the top Business Categories Spending on Local Radio and TV Stations. Drivers of Ad Revenues: What is the growing importance of SMBs? Cross-Platform Selling: What are Radio and TV stations doing to capitalize? Mobile: Its growing importance and how Radio and TV stations can take advantage of it. 3
  • 2014 BIA/Kelsey. All Rights Reserved. 4 National Overview Total U.S. Spending In Local Markets 4
  • 2014 BIA/Kelsey. All Rights Reserved. 5 Definition BIA/Kelsey defines the local media advertising marketplace as all media generating revenues by selling paid media access to local audiences to all types of advertisers. Local audience advertising sales include buys specifying local and regional markets. Newspapers Radio Local Video Over-the-Air Television Cable Television Out-Of-Home Direct Mail Directories Local Magazines Online Mobile Social Categories
  • 2014 BIA/Kelsey. All Rights Reserved. 6 Local Media Five-Year Forecast $133.2 $138.0 $140.7 $147.1 $151.5 $158.6 $120 $125 $130 $135 $140 $145 $150 $155 $160 $165 2013 2014 2015 2016 2017 2018 US$Billions Source: BIA/Kelsey U.S. Local Media Forecast (2013-2018)
  • 2014 BIA/Kelsey. All Rights Reserved. 7 Local Ad Market Currently Dominated by Traditional Media Newspapers Print 13.5% Newspapers Online 2.4% Direct Mail 27.9% TV O-T-A 13.8% TV Online 0.5%Radio O-T-A 10.7% Radio Online 0.4% Print Yellow Pages 3.4% Internet YP 1.6% OOH 5.8% Cable 4.8% Magazine 1.5% Magazine Online 0.2% Online/Interactive 9.9% Email 1.4% Mobile 2.2% 2013 U.S. Local Media Revenues $133.2 Billion Source: BIA/Kelsey U.S. Local Media Forecast (2013-2018)
  • 2014 BIA/Kelsey. All Rights Reserved. 8 Continuing Shift Toward Digital Media $105.3 $106.3 $104.5 $106.4 $104.9 $105.9 $27.9 $31.7 $36.2 $40.7 $46.6 $52.7 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 2013 2014 2015 2016 2017 2018 Traditional Online/Digital US$Billions 2013-2018 CAGRs: Total Media CAGR 3.6% Traditional Media CAGR 0.1% Online/Digital Media CAGR 13.6% $138.0$133.2 $140.7 $147.1 $151.5 $158.6 Note: Numbers are rounded. Source: BIA/Kelsey U.S. Local Media Forecast (2013-2018)
  • 2014 BIA/Kelsey. All Rights Reserved. 9 2014 BIA/Kelsey. All Rights Reserved. A THIRD of ALL Local Media advertising will be Digital Media advertising by 2018 9
  • 2014 BIA/Kelsey. All Rights Reserved. 10 Local Ad Market with More Players than Just Traditional Media in 2018 Newspapers Print 8.5% Newspapers Online 2.5% Direct Mail 24.2% TV O-T-A 14.0% TV Online 0.7% Radio O-T-A 9.9% Radio Online 0.6% Print Yellow Pages 1.1% Internet YP 1.8% OOH 5.9% Cable 4.9% Magazine 1.0% Magazine Online 0.3% Online/Interactive 13.1% Email 1.5% Mobile 9.9% 2018 U.S. Local Media Revenues $158.6 Billion Source: BIA/Kelseys Media Ad View Plus Forecast
  • 2014 BIA/Kelsey. All Rights Reserved. 11 Whats Going on in Local Markets? Media Ad View Plus Offers granular and vertical view of $138 billion local media industry Provides a local and a nationwide comparative forecast Allows for evaluation of opportunities across multiple dimensions: Local Ad Markets Media and Ad Categories Business Categories Source: BIA/Kelseys Media Ad View Plus Forecast
  • 2014 BIA/Kelsey. All Rights Reserved. 12 Auto 21.1% Real Estate 40.4% Quick Service Restaurants 18.4% Businesses Shifting Ad Spending to Online Business categories and their percent of all spending in online media by 2018 $730.2M $1.4B Source: BIA/Kelseys Media Ad View Plus Forecast $3.6 B
  • 2014 BIA/Kelsey. All Rights Reserved. 13 Retail Advertising - 2014 Cable 3.0% Direct Mail 43.3% Email 0.7% IYP 0.4% Mags Print 0.8% Mags Online 0.1% Mobile 1.4% Newspaper Print 16.3% Newspaper Online 3.2% Online 7.4% Out of Home 2.7% PYP 0.5% Radio OTA 10.3% Radio Online 0.5% TV OTA 9.0% TV Online 0.4% U.S - $25.9 Billion Source: BIA/Kelseys Media Ad View Plus Forecast
  • 2014 BIA/Kelsey. All Rights Reserved. 14 National Furniture Consumers Spending Time With Media The Media Audit
  • 2014 BIA/Kelsey. All Rights Reserved. 15 2014 BIA/Kelsey. All Rights Reserved. Health Care Advertising: +$500 Million by 2018 15Source: BIA/Kelseys Media Ad View Plus Forecast 2018 19.8% 2018 7.3% Local Radio StationsLocal TV Stations
  • 2014 BIA/Kelsey. All Rights Reserved. 16 Automotive Dealers Advertising Cable TV 7.7% Direct Mail 5.8% Email 0.7% Internet YP 0.7% Magazines Print 1.0% Magazines Online 0.2% Mobile 1.5% Newspaper Print 16.3% Newspaper Online 3.2% Online 10.2% OOH 0.8% Print YP 0.8% Radio OTA 11.7% Radio Online 0.5% Television OTA 37.4% Television Online 1.4% U.S. 2013 - $12.51 Billion Source: BIA/Kelseys Media Ad View Plus Forecast
  • 2014 BIA/Kelsey. All Rights Reserved. 17 2014 BIA/Kelsey. All Rights Reserved. Online Advertising Automobile Dealers: 17 Classified/Verticals comprise over half of totals 2013 $2.2B 2018 $3.4B Source: BIA/Kelseys Media Ad View Plus Forecast
  • 2014 BIA/Kelsey. All Rights Reserved. 18 Automobile Dealer Advertising Austin, TX vs. Nationwide Cable TV 8.4% Direct Mail 6.4% Email 0.8% Internet YP 0.8% Magazines Print 1.0% Magazines Online 0.2% Mobile 1.6% Newspaper Print 17.7% Newspaper Online 3.5% Online 11.0% OOH 0.8% Print YP 0.9% Radio OTA 11.6% Radio Online 0.5% Television OTA 33.4% Television Online 1.3% Austin, TX 2014 - $61.4 Million Cable TV 7.7%Direct Mail 5.8% Email 0.7% Internet YP 0.7% Magazines Print 1.0% Magazines Online 0.2% Mobile 1.5% Newspaper Print 16.3% Newspaper Online 3.2% Online 10.2% OOH 0.8% Print YP 0.8% Radio OTA 11.7% Radio Online 0.5% Television OTA 37.4% Television Online 1.4% U.S. 2014 - $12.51 Billion Source: BIA/Kelseys Media Ad View Plus Forecast
  • 2014 BIA/Kelsey. All Rights Reserved. 19 Texas New Vehicle Consumer Spending Time With Media The Media Audit
  • 2014 BIA/Kelsey. All Rights Reserved. 20 Automobile Dealers Online Advertising - Austin, TX Search 32.4% Video Display 11.2%Other Display 4.5% Classified / Verticals 52.0% Austin, TX 2017: $19.1 Million Search 32.9% Video Display 6.5%Other Display 7.3% Classified/ Verticals 55.7% Austin, TX 2013: $12.7 Million Source: BIA/Kelsey, 2014 Source: BIA/Kelseys Media Ad View Plus Forecast
  • 2014 BIA/Kelsey. All Rights Reserved. 21 2014 BIA/Kelsey. All Rights Reserved. Importance of Small to Medium-Sized Businesses (SMBs) 21
  • 2014 BIA/Kelsey. All Rights Reserved. 22 Total Local Media Advertising: SMB vs. Non-SMB Advertisers . $47.2 $49.0 $50.1 $52.6 $54.4 $57.2 $86.0 $89.0 $90.6 $94.5 $97.1 $101.4 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 2013 2014 2015 2016 2017 2018 Billions SMB Local Ad Spend Non-SMB Local Ad Spend 34.2% % SMB Source: BIA/Kelsey U.S. Local Media Forecast (2013-2018) 33.0% 33.6% 36.0% 34.8% 35.4%
  • 2014 BIA/Kelsey. All Rights Reserved. 23 Our Local Commerce Monitor (LCM) Surveys SMB media usage, ROI assessments of marketing channels, and the use of mobile, social and loyalty programs. The longest running survey of SMB marketing and advertising to our knowledge, since 1999. Two cuts of data: Core Sample (All); Plus Sample (>$25K ad spend). Results based on 600 responses have a confidence interval of +/- 4.0% at the 95% confidence level. The confidence interval is larger for those questions that were asked of just a subset of the full sample. Source: BIA/Kelseys Local Commerce Monitor (LCM) Wave 17, Q3/2013 (and prior waves, if relevant). Methodology: Online panels.
  • 2014 BIA/Kelsey. All Rights Reserved. 24 Benchmark: Media Spend on Advertising & Promotion (Declined) Total Spend on Advertising & Promotion Declined Source: BIA/Kelseys Local Commerce Monitor (LCM) Waves 15-17 (Q3/2013)
  • 2014 BIA/Kelsey. All Rights Reserved. 25 Number of Media Used Declined Average Number of Different Media Used for Advertising & Promotion Biggest Losers (in SMB usage): Directories Cable TV Newspapers Outdoor Source: BIA/Kelseys Local Commerce Monitor (LCM) Waves 15-17 (Q3/2013) and prior waves, if relevant. Methodology: Online panels.
  • 2014 BIA/Kelsey. All Rights Reserved. 26 Online Footprint Percentage of SMBs Using Each Channel Source: BIA/Kelseys Local Commerce Monitor(LCM) Wave 17, Q3/2013 (and prior waves, if relevant). Methodology: Online panels.
  • 2014 BIA/Kelsey. All Rights Reserved. 27 Mobile: On a Roll (More Mobile Advertising) Used Mobile A Year Ago (Wave 16 Q3/2012) Using Mobile Now (Wave 17 Q3/2013) Increase in use by Plus Spenders: 40% (Wave 16) to 53% (Wave 17). Source: BIA/Kelseys Local Commerce Monitor(LCM) Wave 17, Q3/2012 and Wave 16 (and prior waves, if relevant). Methodology: Online panels.
  • 2014 BIA/Kelsey. All Rights Reserved. 28 2014 BIA/Kelsey. All Rights Reserved. Radio Advertisers 28
  • 2014 BIA/Kelsey. All Rights Reserved. 29 Distribution of Spending by Radio Advertisers Small & Medium-Sized Businesses Online 25.4% Radio 12.5% Mobile 8.0% Sponsorships/ Giveaways 7.1% Deals & Coupons 6.5% PYP 6.2% Newspapers 5.5% Direct Mail 5.2% Email Mktg. 5.1% TV 4.9% Cable 3.4% Other 10.2% 26 additional categories of advertising and marketing spent by radio advertisers Source: BIA/Kelseys Local Commerce Monitor(LCM) Wave 17, Q3/2013 (and prior waves, if relevant). Methodology: Online panels.
  • 2014 BIA/Kelsey. All Rights Reserved. 30 Digital Media Used For Advertising & Promotion By Radio Advertisers 26.4% 29.6% 32.0% 34.4% 36.0% 36.0% 36.8% 44.8% 52.0% 71.2% 0% 20% 40% 60% 80% Online Coupons LinkedIn IYP Facebook Ad Twitter Google Video You Tube Video Website Email Mktg. Facebook Page Source: BIA/Kelseys Local Commerce Monitor (LCM) Wave 17, Q3/2013 (and prior waves, if relevant). Methodology: Online panels.
  • 2014 BIA/Kelsey. All Rights Reserved. 31 2014 BIA/Kelsey. All Rights Reserved. 32.9% Percentage of Advertising Budget for Digital / Online for next 12 months 31
  • 2014 BIA/Kelsey. All Rights Reserved. 32 2014 BIA/Kelsey. All Rights Reserved. Cross-Platform Selling 32
  • 2014 BIA/Kelsey. All Rights Reserved. 33 Your Customers Needs Are Changing
  • 2014 BIA/Kelsey. All Rights Reserved. 34 2014 BIA/Kelsey. All Rights Reserved. Digital Agency 34
  • 2014 BIA/Kelsey. All Rights Reserved. 35 Hello, Im from [your company], and Im here to help your business. And so are 38 of your closest friends. Solution to Help You Grow Your Business! We Provide It! Search/SEM/SEO X Display X Email marketing X Social marketing X Video marketing X Electronic Presence/Reputation Management X SMS Text/Mobile Apps X Contests/Games X Loyalty X Coupons X Website hosting/responsive design X Etc., etc., etc. X
  • 2014 BIA/Kelsey. All Rights Reserved. 36 Optimizing Sales Mandatory Companywide Certification and Training Some media companies require that all sales reps become Google AdWords certified Some often hires non-ads salespeople who are experienced in truly consultative business sales Compensation & incentives for digital sales Rules of Thumb: 4 legged calls for major accounts ($1500+/month) Long tail = single rep/telesales/self-serve Digital vs. Hybrid sales team debate continues Verticals Focus: High-value leads + Bigger budgets = Better margins Auto, Medical, Education, Financial Services, Real Estate Long-tail SMB approaches are less proven & difficult to scale
  • 2014 BIA/Kelsey. All Rights Reserved. 37 Fulfillment: We Recommend Partnering Key Questions for Partner Vetting What Is Their Time-to-Market? Can They Scale Fulfillment as You Scale Sales? How do they inform, train & empower your sales teams? Whats the Cost Structure? Your Margins? Why Outsource? Not Your Core Competency Expedite Time-to-Market Let Your Sales Team Focus OnSELLING
  • 2014 BIA/Kelsey. All Rights Reserved. 38 Many Partner Choices (Some are more specialized than others)
  • 2014 BIA/Kelsey. All Rights Reserved. 39 Examples of Media Companies Successfully Cross-Selling
  • 2014 BIA/Kelsey. All Rights Reserved. 40 2014 BIA/Kelsey. All Rights Reserved. Consumer Use of Mobile Devices: Opportunities? 40
  • 2014 BIA/Kelsey. All Rights Reserved. 41 Monthly Time of Viewing Spent by Medium Users 2+, 1st Quarter 0 20 40 60 80 100 120 140 160 2010 2011 2012 2013 Hours Live TV Timeshifted TV Internet Video Mobile Video Source: Nielsen, The Cross-Platform Report. 2011-2013 84.1% of all viewing
  • 2014 BIA/Kelsey. All Rights Reserved. 42 Monthly Time Spent of Viewing by Medium Users 2+, 1st Quarter 9.5 10.8 12.2 13.4 4.2 4.6 5.4 8.3 4.3 4.8 5.0 5.5 0 2 4 6 8 10 12 14 16 2010 2011 2012 2013 Hours Timeshifted TV Internet Video Mobile Video 2010-2013: 40.3% Increase 2010-2013: 26.5% Increase Source: Nielsen, The Cross-Platform Report, 2011-2013 2010-2013: 97.6% Increase
  • 2014 BIA/Kelsey. All Rights Reserved. 43 Sources of News: Where People Got News Yesterday Large decreases in news sources for traditional media
  • 2014 BIA/Kelsey. All Rights Reserved. 44 Daily and Regular News Consumption Local TV news saw nearly 30% drop in daily news consumption Source: Pew Research Center, Trends in News Consumption: 1991-2012
  • 2014 BIA/Kelsey. All Rights Reserved. 45 2014 BIA/Kelsey. All Rights Reserved. More Usage of News Websites or Apps: Respondents using a smartphone/tablet to consume digital content with news website or app: Source: Donald W. Reynolds Journalism Institute, University of Missouri, July 22, 2013 45 2012 62% 2013 70%
  • 2014 BIA/Kelsey. All Rights Reserved. 46 Texas TV & Radio Integrating Over-the-Air Content with Online & Mobile KLBJ KASE KVUE-TV Radio Television KXAN-TV
  • 2014 BIA/Kelsey. All Rights Reserved. 47 2014 BIA/Kelsey. All Rights Reserved. Conclusions 47
  • 2014 BIA/Kelsey. All Rights Reserved. 48 2014 BIA/Kelsey. All Rights Reserved. Texas radio and television stations find themselves in an incredibly competitive and changing marketplace 48
  • 2014 BIA/Kelsey. All Rights Reserved. 49 2014 BIA/Kelsey. All Rights Reserved. In the local advertising marketplace, Radio and television stations are holding their own 49
  • 2014 BIA/Kelsey. All Rights Reserved. 50 2014 BIA/Kelsey. All Rights Reserved. YET viewers and advertisers have more cross-platform opportunities to consider 50
  • 2014 BIA/Kelsey. All Rights Reserved. 51 2014 BIA/Kelsey. All Rights Reserved. Broadcasters must use their strengths to pivot and take advantage of opportunities: Local Sales Force: Boots on Ground 51 Local Image Local Info and Programming
  • 2014 BIA/Kelsey. All Rights Reserved. 52 2014 BIA/Kelsey. All Rights Reserved. BIA/Kelsey Helps Clients Succeed Every Step of the Way UNDERSTAND marketplace dynamics IDENTIFY & MANAGE the competition BASE DECISIONS on reliable, actionable market data & insights ALIGN PRODUCTS & RESOURCES to drive operations MAKE INVESTMENTS in growth opportunities 52
  • The Local Media &Advertising Experts 2014 BIA/Kelsey. All Rights Reserved. This published material is for internal client use only. It may not be duplicated or distributed in any manner not permitted by contract. Any unauthorized distribution could result in termination of the client relationship, fines and other civil or criminal penalties under federal law. BIA/Kelsey disclaims all warranties regarding the accuracy of the information herein and similarly disclaims any liability for direct, indirect or consequential damages that may result from the use or interpretation of this information. Questions & Comments: Mark R. Fratrik, Ph.D. Sr. Vice President, Chief Economist (703) 802-2982 mfratrik@biakelsey.com

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