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 BroadcastersAugust 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 MediaForecasts
© 2014 BIA/Kelsey. All Rights Reserved.3
© 2014 BIA/Kelsey. All Rights Reserved.
Overview of TalkLocal 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.
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National OverviewTotal U.S. Spending In Local Markets
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DefinitionBIA/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
2013 2014 2015 2016 2017 2018$120
$125
$130
$135
$140
$145
$150
$155
$160
$165
$133.2$138.0
$140.7
$147.1$151.5
$158.6
US$
Billio
ns
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 Print13.5%
Newspapers Online2.4%
Direct Mail27.9%
TV O-T-A13.8%
TV Online0.5%Radio O-T-A
10.7%
Radio Online0.4%
Print Yellow Pages3.4%
Internet YP1.6%
OOH5.8%
Cable4.8%
Magazine1.5%
Magazine Online0.2% Online/Interactive
9.9% Email1.4%
Mobile2.2%
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
2013 2014 2015 2016 2017 2018$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$105.3 $106.3 $104.5 $106.4 $104.9 $105.9
$27.9 $31.7 $36.2 $40.7 $46.6 $52.7
Traditional Online/Digital
US$
Billio
ns
2013-2018CAGRs:
Total MediaCAGR 3.6%
Traditional Me-dia
CAGR 0.1%
Online/Digital Media
CAGR 13.6%
$138.0$133.2$140.7 $147.1 $151.5 $158.
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Note: Numbers are rounded.Source: BIA/Kelsey U.S. Local Media Forecast (2013-2018)
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© 2014 BIA/Kelsey. All Rights Reserved.
A THIRD of ALL Local Media advertising will be Digital Media advertising by 2018
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Local Ad Market with More Players than Just Traditional Media in 2018
Newspapers Print8.5%
Newspapers Online2.5%
Direct Mail24.2%
TV O-T-A14.0%TV Online
0.7%Radio O-T-A
9.9%Radio Online
0.6%
Print Yellow Pages1.1%
Internet YP1.8%
OOH5.9%
Cable4.9%
Magazine1.0%
Magazine Online0.3%
Online/Interactive13.1%
Email1.5%
Mobile9.9%
2018 U.S. Local Media Revenues — $158.6 Billion
Source: BIA/Kelsey’s Media Ad View Plus Forecast
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What’s 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/Kelsey’s Media Ad View Plus Forecast
© 2014 BIA/Kelsey. All Rights Reserved.12
Auto 21.1%
Real Estate40.4%
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$1.4
B
Source: BIA/Kelsey’s Media Ad View Plus Forecast
$3.6 B
© 2014 BIA/Kelsey. All Rights Reserved.13
Retail Advertising - 2014
Cable3.0%
Direct Mail43.3%
Email0.7%
IYP0.4%
Mags Print0.8%
Mags Online0.1%
Mobile1.4%
Newspaper Print
16.3%
Newspaper Online3.2%
Online7.4%
Out of Home2.7%
PYP0.5%
Radio OTA10.3%
Radio Online0.5%
TV OTA9.0% TV Online
0.4%
U.S - $25.9 Billion
Source: BIA/Kelsey’s Media Ad View Plus Forecast
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National Furniture Consumers Spending Time With Media – The Media Audit
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© 2014 BIA/Kelsey. All Rights Reserved.
Health Care Advertising: +$500 Million by 2018
15Source: BIA/Kelsey’s 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 TV7.7%
Direct Mail5.8%
Email0.7%
Internet YP0.7%
Magazines Print1.0%
Magazines Online0.2%
Mobile1.5%
Newspaper Print
16.3%
Newspaper Online3.2%
Online10.2%
OOH0.8% Print YP
0.8%
Radio OTA
11.7% Radio Online0.5%
Tele-vision OTA
37.4%Television Online1.4%
U.S. 2013 - $12.51 Billion
Source: BIA/Kelsey’s Media Ad View Plus Forecast
© 2014 BIA/Kelsey. All Rights Reserved.17
© 2014 BIA/Kelsey. All Rights Reserved.
Online Advertising Automobile Dealers:
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Classified/Verticals comprise over half of totals
2013
$2.2B
2018
$3.4B
Source: BIA/Kelsey’s Media Ad View Plus Forecast
© 2014 BIA/Kelsey. All Rights Reserved.18
Automobile Dealer Advertising – Austin, TX vs. Nationwide
Cable TV8.4% Direct Mail
6.4%
Email0.8%
Internet YP0.8%Magazines
Print1.0%
Magazines Online0.2%
Mobile1.6%
Newspaper Print
17.7%Newspaper
Online3.5%
Online11.0%
OOH0.8%
Print YP0.9%
Radio OTA11.6%
Radio Online0.5%
Television OTA
33.4%
Television Online1.3%
Austin, TX 2014 - $61.4 Million
Cable TV7.7%
Direct Mail5.8%Email
0.7%
Internet YP0.7%
Magazines Print1.0%
Magazines Online0.2%
Mobile1.5%
News-paper Print
16.3% Newspa-per Online
3.2%Online10.2%OOH
0.8%
Print YP0.8%
Radio OTA11.7%
Radio On-line0.5%
Television OTA
37.4%Television Online
1.4%
U.S. 2014 - $12.51 Billion
Source: BIA/Kelsey’s Media Ad View Plus Forecast
© 2014 BIA/Kelsey. All Rights Reserved.19
Texas New Vehicle Consumer Spending Time With Media – The Media Audit
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Automobile Dealers Online Advertising - Austin, TX
Search32.4%
Video Dis-play11.2
%Other Display4.5%
Clas-sified/ Verti-cals52.0
%
Austin, TX 2017: $19.1 Million
Search32.9%
Video Display6.5%
Other Display7.3%
Clas-sified/ Verti-cals
55.7%
Austin, TX 2013: $12.7 Million
Source: BIA/Kelsey, 2014Source: BIA/Kelsey’s Media Ad View Plus Forecast
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© 2014 BIA/Kelsey. All Rights Reserved.
Importance of Small to Medium-Sized Businesses (SMBs)
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Total Local Media Advertising:SMB vs. Non-SMB Advertisers
.
2013 2014 2015 2016 2017 2018$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$47.2 $49.0 $50.1 $52.6 $54.4 $57.2
$86.0 $89.0 $90.6 $94.5 $97.1 $101.4
SMB Local Ad Spend Non-SMB Local Ad Spend
Billio
ns
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/Kelsey’s 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/Kelsey’s 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/Kelsey’s 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 FootprintPercentage of SMBs Using Each Channel
Source: BIA/Kelsey’s 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/Kelsey’s Local Commerce Monitor™(LCM) Wave 17, Q3/2012 and Wave 16 (and prior waves, if relevant). Methodology:
Online panels.
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Radio Advertisers
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Distribution of Spending by Radio Advertisers – Small & Medium-Sized Businesses
Online25.4%
Radio12.5%
Mobile8.0%
Sponsorships/ Giveaways
7.1%
Deals & Coupons
6.5%
PYP6.2%
News-papers5.5%
Direct Mail5.2%
Email Mktg.5.1%
TV4.9%
Cable 3.4% Other
10.2%
26 additional categories of advertising and marketing spent by radio advertisers
Source: BIA/Kelsey’s 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
Online Coupons
IYP
Facebook Ad
Video You Tube
Video Website
Email Mktg.
Facebook Page
0% 20% 40% 60% 80%
26.4%
29.6%
32.0%
34.4%
36.0%
36.0%
36.8%
44.8%
52.0%
71.2%
Source: BIA/Kelsey’s Local Commerce Monitor™ (LCM) Wave 17, Q3/2013 (and prior waves, if relevant). Methodology: Online panels.
© 2014 BIA/Kelsey. All Rights Reserved.31
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32.9% Percentage of Advertising Budget for Digital / Online for next 12 months
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Cross-Platform Selling
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Your Customers’ Needs Are Changing
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Digital AgencyX
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Hello, I’m from [your company], and I’m 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 XDisplay XEmail marketing XSocial marketing XVideo marketing XElectronic Presence/Reputation Management
X
SMS Text/Mobile Apps XContests/Games XLoyalty XCoupons XWebsite hosting/responsive design XEtc., 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? What’s the Cost Structure? Your Margins?
Why Outsource? Not Your Core Competency Expedite Time-to-Market Let Your Sales Team Focus On…SELLING
© 2014 BIA/Kelsey. All Rights Reserved.38
Many Partner Choices (Some are more specialized than others)
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Examples of Media Companies Successfully Cross-Selling
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Consumer Use of Mobile Devices: Opportunities?
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Monthly Time of Viewing Spent by Medium – Users 2+, 1st Quarter
2010 2011 2012 20130
20
40
60
80
100
120
140
160Live TV Timeshifted TV Internet Video Mobile Video
Hour
s
Source: Nielsen, The Cross-Platform Report. 2011-2013
84.1% of all
viewing
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Monthly Time Spent of Viewing by Medium – Users 2+, 1st Quarter
2010 2011 2012 20130
2
4
6
8
10
12
14
16
9.510.8
12.213.4
4.2 4.65.4
8.3
4.3 4.8 5.0 5.5
Timeshifted TV Internet Video Mobile Video
Hour
s
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
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© 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
201262%
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
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© 2014 BIA/Kelsey. All Rights Reserved.
Conclusions
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© 2014 BIA/Kelsey. All Rights Reserved.
Texas radio and television stations find themselves in an
incredibly competitive and changing marketplace
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© 2014 BIA/Kelsey. All Rights Reserved.
In the local advertising marketplace,Radio and television stations are “holding their own”
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© 2014 BIA/Kelsey. All Rights Reserved.
YET viewers and advertisers have more cross-platform opportunities to consider
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Broadcasters must use their strengths to pivot and take advantage of opportunities:
Local Sales Force: Boots on
Ground
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Local Image
Local Info and Programming
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© 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
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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) [email protected]
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