Why media networks matter for local publishers
August 1st, 2008 — Arul Sundaram
Interesting article in the WSJ today discussing the inability of newspaper advertising to keep pace online (subscription required). Not in absolute dollars, but certainly in share. They cite some compelling stats, mostly from Borrell:
Over the past two years, the number of local salespeople peddling online ads for newspapers has ballooned to 15,500 from 5,900
One thing they touch on, but don’t really spend much time digging into, is the value of participating in a network:
A lot of newspaper companies have teamed up with Internet players like Yahoo on a variety of cross-selling and ad-technology initiatives to get more local ads.
From what we’ve seen at IB, there is a real reason for local publishers to seek out networks. Much of the stuff Mark Potts recommends in his take on the Journal story requires a partner who can bring scale to their investments in technology, sales tools, etc. But, if a publisher finds the right partner, they can outperform the market.
How do we know that networks drive revenue? We had Borrell Associates run a custom cut of the data they used to produce their May study, “What Local Media Websites Earn”. What we found was that sites that belonged to our hosted network make 36% more revenue per TV household than their non-IB TV station site competitors. That’s a weird metric, you might say. And you’re right if you are thinking of an Internet site that wants to attract the web audience at large. The TV household metric, however, becomes very relevant when targeting a local audience. For local sites, revenue is driven by their ability to have greater reach within their local DMA and then their ability to sell against that reach. As a good network, IB provides the tools for reach and revenue.
Specifically, the Borrell report showed:
Essentially, these findings validate what IB has been seeing all along. Our national advertising business is strong: creating $15 RPMs from our national inventory, while other targeted networks generate $5 RPMs. (Note: RPM = Revenue per thousand. It’s the sum of all revenue (regardless of CPC, CPM, CPA, etc.) that is generated off of 1,000 pageviews). We recently launched the IB Local Network in comScore which puts us around the top 40th ad network each month. We’re adding new local publishers to that network each month and are excited about new opportunities across the board.
August 1st, 2008 at 10:59 am
[…] Internet Broadcasting worked with Borrell Associates to analyze the annual revenue generated by its affiliate sites compared to the TV website average. “What we found was that sites that belonged to our hosted network make 36% more revenue per TV household than their non-IB TV station site competitors,” writes Arul Sundaram, VP Business Strategy at IB. “Essentially, these findings validate what IB has been seeing all along. Our national advertising business is strong: creating $15 RPMs from our national inventory, while other targeted networks generate $5 RPMs.” More data in Arul’s blog post here. […]
August 1st, 2008 at 2:10 pm
My question on the Borrell numbers is whether IB is the only difference between the higher revenue stations and the others. Could other factors — better branding based on strong content, for example — also be a factor? Obviously IB could be a contributor to that but perhaps there are other factors as well.
August 1st, 2008 at 2:15 pm
@Dave: Good question re: are IB stations bigger. By that, I assume you mean that they get more UVs within a market, and not that they are larger market stations. The larger markets stations issue is controlled for because we have presented the numbers are revenue per TV household, so if you sell $5 of ads in a market of 5 households or $100 of ads in a market of 100 households, it will show up as $1 / household either way.
However, if IB stations get more UVs, you are correct that it allows the station AEs to sell against a bigger online pool. My response to that would be: how much is IB helping those stations be #1? Between our relationship with CNN, our SEO services, and our national content attracting more repeat visitors, I’d argue that IB absolutely has a hand in growing the audience of sites on our network.
August 3rd, 2008 at 12:23 am
[…] Strategy Arul Sundaram talked about this very idea in a post today on the IB corporate blog State Of Local. He argues that local publishers need a partner who can bring scale to their investments in […]
August 13th, 2008 at 6:37 am
[…] 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/. […]