Monday, May 08, 2006

Video Ads Provide Hope for Local Broadcasters

Business Week has an interesting article about a potential life line for local broadcasters.

From the article:

"Other big networks have signaled a willingness to cut the local stations in on such revenues, as evidenced by NBC's late-April deal to jointly sell its 213 affiliate stations' video programming. Which is nice, but it doesn't stop local station guys' nightmares from now coming true.

But sometimes the Web can give back some of what it takes away, and there's untapped upside for local TV guys online. Ad agency folks will tell you that there's more demand for Web video ads -- for a local station's site, the ad snippet preceding, say, sports highlights -- than there is inventory. Although cost estimates vary wildly, analysts reckon that Web sites notch significantly more revenue for video ads than for other online ads.

It's also an online ad form that's immediately recognizable to the most tradition-wedded advertiser, since it's basically a TV ad; for the same reason, it makes intuitive sense even to the dimmest TV ad sales reps. The big three in local media are radio, TV, and newspapers. Which has the most video programming to sell ads around? (Think hard now.)

NO ONE IS GOING TO CONFUSE the market for broadband video ads with broadcast TV's ad market. But at an April industry gathering, executives of broadband video companies estimated that up to $1 billion would be spent on the nascent form in the next 12 months; halve this for hyperbole, and it's still real money. In 2003, the size of this market was $30 million. Within this growth lurks opportunity for local TV, but it's only poised for so much growth because it has done such a poor job online thus far.



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