What’s ‘Reality’ When Calculating Online Ad Numbers for Local TV and Radio?

In the past 12 months, local radio and television stations have made significant strides to bolster their online activities, and it is generating noticeable revenues.

As will be detailed in BIA/Kelsey’s upcoming Investing In Television® and Investing In Radio® publications, in 2011 local television stations saw a 19.0 percent increase in their online revenues to $536 million for total industry online revenues, while local radio stations saw a 15.1 percent increase to $439 million for total industry online revenues.

What’s driving these numbers? In one word: assets. From valuable local content, to cross-promotional opportunities between on and off air, and a trained sales staff that understands the local market and the advertiser community, the core assets of local stations give them a competitive footing in the online arena. In turn, this success has given broadcast stations the opportunity to expand their position in their local markets from solely an over-the-air media source to a local media company that can provide access to local audiences in different, effective ways for their advertiser clients.

With the first quarter of 2012 about to end, we expect similar growth to continue for the rest of year with a compounded annual growth rate of 12.8 percent for television and 11.8 percent for radio from 2011-2016. The chart below shows the growth BIA/Kelsey expects for online advertising revenues generated by local television and radio stations.

Now, while it’s tempting to slice and dice these numbers to look for bigger gains, BIA/Kelsey’s methodology is to build forecasts based on actual estimates of local online market advertising revenue totals. We solicit these estimates from local television and radio stations and those who are knowledgeable about these local markets. Additionally, our model does not include revenues of e-commerce sales through daily or weekly deal campaigns or any retransmission consent (sometimes included by TV companies as “digital revenues.” By excluding these portions of revenues, our forecast offers companies a realistic picture of the actual advertising marketplace.

Even staying grounded in reality, local television and radio stations can look forward to a steady year of solid online growth. With some remaining uncertainties in the economy, this isn’t a bad place to be at all.