By Cory Bergman
NEARLY TWO YEARS ago, I wrote a lengthy column on Lost Remote urging TV stations and the networks to make online video a top priority. I consider this column to be just as important and perhaps even more critical for local television.
This will be the year that the portals, major national news sites and other pure plays aggressively expand into local content. Itâ€™s already underway. Yahoo News, the top news site on the web, has launched local news pages along with You Witness Video, a citizen video service. IAC just premiered AskCity, a local search, mapping and events portal for each of the major markets thatâ€™s integrated with CitySearch and Ticketmaster. Google has rolled out a free service that allows local companies to host their own business web pages with the ability to offer free, printable coupons and click-to-call functionality.
Then there are the smaller sites, nearly too numerous to count, that are launching promising niche products. For example, Yelp allows users in a social network to provide suggestions for local restaurants, shopping, events and just about anything else. Judyâ€™s Book promises to highlight the best local bargains by rewarding its users for pointing them out. SonicLiving will alert you when your favorite bands are coming to town and then connect you with other people who want to go to the same concerts. And there are dozens more, not to mention the gazillions of local blogs.
This is just the beginning of the local push. But surprisingly, local television is standing flat-footed while key local niches and their corresponding revenue pools are captured by the pure plays. In a few cases, stations are cutting content-for-revenue deals, but this is only a partial, case-by-case solution. In the next 2 to 4 years, if local TV doesnâ€™t aggressively launch innovative new products into key local niches, its interactive revenue will plateau at a shockingly small share. So small, it will only scratch the surface in offsetting the decline in television ad revenue.
Numbers tell the story. An average top-rated television station, with a LMA sister station, will grab a 20-30 percent share or more of the TV dollars in the market. Yet its website will capture just 1-4 percent share of local internet dollars, according to market-by-market statistics from Borrell Associates.
It doesnâ€™t take a mathematician to understand what happens next, as internet dollars continue to grow and TV dollars flatten and even decline. But oddly, many in the local TV industry expect their share of internet dollars will increase by only incrementally improving a single product â€” their TV stationâ€™s website. But in reality, under that strategy, the share will at best remain constant, if not decline.
The key issue centers on what local broadcasters define as “core” in their markets. Despite the fact that many local TV stations now call themselves local media companies, they still see everything through a TV prism. They haven’t branched out online beyond repurposed TV news, self-promotion and TV-centric sales. And they still consider their competition to be local TV and newspaper sites. This myopic view is dangerous on two fronts:
1. The home front
This is where local television is already competing online â€” principally in local news, weather and traffic. Few sites are producing any original content for the web (repurposing TV video into webcasts doesnâ€™t count), and if they are, itâ€™s once in a blue moon. Reporters are still assigned for television newscasts using TV criteria. And only a handful of sites have done any strategic analysis or dedicated market research without folding the station into it.
My point here is a mass-media, repurposed-TV approach works great on TV, but dramatically reduces the growth potential of a stationâ€™s website. Iâ€™m not saying thereâ€™s no strategic overlap, but we need to approach the web from a web perspective. In todayâ€™s stations, the TV influence runs deeper than many imagine.
For example, one of the most popular features on a weather website is the zip code forecast. Itâ€™s been a staple of Weather.com, Yahoo and others for years. But on many local TV websites, zip code forecasts have been buried because they offer National Weather Service results that occasionally disagree with the one-size-fits-all forecast provided by the TV meteorologists. News directors have been worried that it sends mixed messages, when in reality the decision to downplay it reduces the stationâ€™s competitiveness online. A recent study found that just 26 percent of web users go to local TV websites for local weather. Almost all of the rest go to national sites, such as Weather.com and Yahoo, where they type in their zip code.
There are dozens more examples, most of which are based on these three misplaced TV edicts:
1. Keep branding and content messages consistent between TV and the web
2. Leverage the web to promote TV and its priorities
3. Protect the TV mothership from “cannibalism” in ratings, sales and resources
These TV edicts have damaged online growth and forced many talented web producers to flee TV stations for more web-friendly ground. What are your siteâ€™s strategic goals? Stay consistent with on air? Promote on air? Protect the TV station? No. Itâ€™s to win online, both in audience and revenue, even if it means diverging from TVâ€™s strategy.
Itâ€™s high time for TV people to get out of the web kitchen. Hire smart web people who have a firm grasp of online content, usability (a lost art on TV sites), sales and business development. Then empower them with resources, hold them accountable for results and get out of the way. Iâ€™m not saying that station-level TV execs shouldnâ€™t ultimately oversee the web â€” which is an effective organizational structure as we reallocate resources online â€” but they should take their hands off the home page, literally and figuratively.
As long as TV stations treat the web like an extension of TV, theyâ€™ll fail online. Thatâ€™s where the second front comes into play.
2. The new frontier
This is where local television isnâ€™t competing online but should be. Let’s look at local search to put this into perspective.
Approximately 34 percent of all searches on the internet are local, and Google commands the majority of local search dollars, drawing in companies both large and small. Borrell Associates predicts local search will be the fastest growing ad category over the next several years, and by 2010, revenue generated from local search will approximately equal revenue from local display advertising and classifieds combined.
Local broadcasters are generating no real search dollars, and with a few exceptions, most TV sites have nominal classifieds offerings. After all, search and classifieds were never considered â€œcoreâ€ for local television. Now, years later, weâ€™ve missed our entry point, and stations are painfully behind. No wonder why weâ€™re capturing just 1 to 4 percent of local online dollars.
But donâ€™t dismay, there are plenty of content-related opportunities left. Take a big step back and look at the full competitive picture. What online and mobile opportunities exist in your market? Which would overcome a competitive threat from a nationally-run, localized site with better technology? How can you leverage your local knowledge and relationships to create an advantage? Which opportunities offer the most revenue potential? How can you tap your users to keep operating costs low?
The key here is that you work forward, not backwards in the creative process. Start with the user need â€” not your current capabilities â€” to avoid limiting your ideas. Donâ€™t assume that new products will be part of your existing TV site or brand â€” in most cases, creating a new site and brand will yield better results, especially when targeting anyone under the age of 34.
But hereâ€™s where reality clicks in. Local media companies are notoriously slow to innovate because of old, institutional processes and a built-in fear of failure. How can you empower the smartest entrepreneurs in your company to experiment and grow new ideas? What process do you use to evaluate and finance new product ideas? Would you green-light an idea that doesnâ€™t guarantee short-term profitability? (You better, because thatâ€™s how most successful sites are born.) How can you beef up your technological capabilities to handle a steady stream of new online products? How can you do all of this while your legacy businesses are under increasing pressure?
This is the crux of the matter, and it all revolves around people and leadership. â€œThe prize in the local online ad revenue war will go to the company that takes a Media 2.0 approach to information online,â€ writes consultant Terry Heaton. â€œThere will be an enormous demand for people with new skills and new talents in the coming year, not only in sales, but also in production and technology. We simply cannot expect people from within the incumbency to drive our response to the disruption.â€
Success in increasing your local share of online dollars is directly linked to your ability to find smart, web-savvy people who are empowered to move innovative products to market fast â€” much faster than TV traditionally can accomplish â€” with as few TV encumbrances as possible. Itâ€™s not easy, but thereâ€™s no time to waste. â€œ2007 will be THE turning point year in the struggle for local supremacy,â€ writes Heaton, â€œand those who do not address it immediately will find themselves being nothing more than content creators feeding the same companies that have descended upon us to pull money from our local markets.â€