Doubling Digital Ad Revenues

2. Doubling Digital Ad Revenues • Local TV stations generate approximately 95% of their ad revenue from traditional on-air content. • They are overlooking the opportunity, however, to generate more revenues from their owned-and-operated Web assets, mobile apps and social media platforms, which represent just 5% of all current ad revenues. • BIA/Kelsey has estimated that local stations could double digital ad revenues by monetizing the audiences that they have already attracted to Facebook. Local advertisers would love to have access to these audiences and pay for the privilege.

3. Estimates of Local TV Station’s Ad Revenues • According to BIA/Kelsey estimates, advertisers will spend $147.9 billion in local media during 2017, with local TV’s share 14.6%, or $21.6 billion. • Direct mail will be first, at $37.1 billion and a 25.1% share, and online/interactive third behind TV, at $18.6 billion and a 12.6% share. • By 2021, local ad spending will total $174 billion, or a Compound Annual Growth Rate (CAGR) of 3.8%, with mobile, social, local online and mobile video predicted to increase by a minimum of 17%.

4. Local TV Stations’ Digital Ad Revenues, 2016–2021 • Digital ad revenues for local TV stations during the period 2016–2021 will increase 50%, from $1.0 billion to $1.5 billion. • Despite that substantial increase, digital’s share of total revenues will only increase from 4.6% (2016) to 6.4% (2021). • Clearly, relying almost entirely on over-the-air ad revenues is not an advantageous strategy for local TV stations. Yes, over-the-air will generate enormous shares during this period, but digital will generate much larger CAGRs.

5. Social Media Snapshot • According to the latest Pew Research Center data (2016), Facebook, Twitter and Instagram are the Big Three social media platforms, with 68% of all Americans on Facebook, 21% on Twitter and 28% on Instagram. • Facebook has an overwhelming advantage over Twitter and Instagram (often 3X or more) in gender, age, geography, income and education demographics. • Facebook also dominates in its share of social media advertising, with 81.8% for 2017 and 80.2% projected for 2021. Only Twitter is forecast with double-digit shares, at 10.7% and 10.2%, respectively.

6. Social Media Is the Growing News Source • The biggest reasons local TV stations should implement a strategy to maximize their digital ad revenues – and on Facebook, specifically – is the increasing number of Americans who use social media for some or all of their news access. • According to August 2017 data from Pew Research Center, 67% of Americans obtained news from social media, with 20% saying often, 27% sometimes and 20% hardly ever. • Although the largest group is still adults 18–49, at 78%, for the first time a majority (55%) of adults 50+ were accessing social media for news.

7. Facebook Also Dominates as the Social Media News Source • Of 9 social media sites Pew measured, Facebook was the primary news source for most US adults who used social media, and at more than twice #2 YouTube, or 45% and 18%, respectively. • Twitter was a distant third, at 11%, with all other sites in single digits: Instagram, 7%; Snapchat and LinkedIn, 5% each; Reddit, 4%; WhatsApp, 2%; and Tumblr, 1%. • The other critical element is the number of younger adults who use TV as their primary news source has been declining. Clearly, a TV station with a greater and more active presence on Facebook can capture and offer this audience to advertisers.

8. Facebook Is the Engagement-and-Reach Leader • BIA/Kelsey’s research of top-ten, mid-sized and small-market DMAs during Q4 2016 found “that more than 90% of the engagement for broadcasters in all three market sizes came from Facebook.” • In total fans/followers and page likes, Facebook had a 65% share to Twitter’s 31% during Q4 2016; however, in total post across platforms, Twitter outperformed Facebook, 69% to 28%. • Engagement, or the total number of actions (likes, comments, etc.), is where Facebook totally dominated, at 92%, compared to 4% each for Twitter and Instagram.

9. SMBs Know the Score • More local SMBs understand the value of targeting impressions with geotargeting techniques, as the CAGR for local social activation for the period 2016–2021 is forecast at 28.3%, or an increase from $3.1 billion to $10.8 billion. • The primary strategy for local TV stations is to follow the audience; and the audience is local SMBs – and, of those who advertise on TV and cable, the largest percentages use Facebook news ads and video ads. • Facebook news ads are #1 among SMBs during 2017, at 30.1%; followed by Facebook video, 27.3%; LinkedIn, 26.9%; a blog, 25.4%; Twitter, 25.1%; YouTube, 25.1%; and Instagram, 22.9%.

10. Calculating the Value of Monetizing Facebook Audiences • BIA/Kelsey, in association with Share Rocket, a leading provider of social ratings currency data for local TV, determined the value of reach, impressions, video views and engagement in Madison, WI; Kansas City, KS-MO; and Los Angeles, CA. • Using Share Rocket data from July 2016–June 2017, Los Angeles TV stations had a 3.9% growth potential, or a monetization value of $61.7 million; Kansas City, 6.7% and $10.7 million; and Madison, 3.8% and $2.35 million. • According to BIA/Kelsey calculations, if rating estimates were off by just half a point, then advertisers in Los Angeles could improperly spend $6.4 million; in Kansas City, $560,000; and in Madison, $248,175.

11. Implementing a Facebook Monetization Strategy BIA/Kelsey recommends Facebook’s Sponsored Content as your station’s best strategy for monetizing its Facebook audience for these four reasons: • “Cost of sales is low. • Content costs are low. • New source of premium video inventory. • Scarcity provides upward pricing pressure.” This is certainly an opportunity that your station should explore because digital will only continue to draw local audiences and ad revenues from traditional media.