Newspapers Still Dominate Local, But TV And Radio Growth Rates Zoom Ahead: Borrell
Local newspapers sites still generate the highest ad revenues among traditional media, at an estimated $3.7 billion, but local radio and TV sites’ growth rates are double, a report from local media analyst Borrell Associates, with help from BIA Financial, predicts. Aside from the worsening economy and chaos on Wall St., newspapers’ growth is hindered by its limited diet of display ads and the usual pool of marketers they tend to rely on for the print side. But the report also shows that newspapers, along with local TV and radio, are still relatively strong versus internet companies not tied to traditional media. That said, the rise of TV and radio will continue to cut into newpapers’ local dominance.
—TV and radio to grow rates double newspapers’: From 2002 to the end of this year, local newspaper sites’ growth rate is expected to have amounted to 33.5 percent gains, compounded annually. Local TV and radio station sites, during this same period, are projected to have grown 67.2 percent and 69.9 percent on that same basis. That’s also ahead of what Borrell calls “pure-play” internet companies like AOL, Yahoo and Google, which don’t have a traditional ad spend side. The pure play category is anticipated to have grown 40.5 percent every year through the end of 2008. But because of newspapers’ head-start and cross-selling opportunities, their value will still dominate.
Lots more after the jump...
—Display’s decline hurts newspapers: Newspaper online revenue growth is below overall local online spending growth. Also, the rate of growth in newspaper online ad revenue is declining. Borrell attributes this to newspaper sites’ reliance on display and classified ad categories, which face declining spending. Standard-format ads – banners, pop-ups, tiles and classified listings – which Borrell says will comprise 50.6 percent of all local online spending in 2008 and only 13.4 percent in 2013. The analyst sees substantial increases in the shares captured by local e-mail marketing and streaming audio/video ads (particularly long-form, opt-in video), which will grow from a combined 19 percent share of the online ad market in 2008 to more than 59 percent in 2013, the report says.
—Local media valuations: Looking at the largest local newspaper sites in the U.S., Borrell estimates their worth to be between $300- to $450 million. Local TV sites are still playing catch-up to some extent, but they’re expected to gain on newspapers. The same is true for radio. But as it stands now, the values of the largest-grossing U.S. TV station sites are between $30- and $40 million. Sites operated by local radio groups in are valued between $15- and $20 million. Independently owned pure-play sites are just beginning to make significant inroads in local on-line markets. While these sites are expected to pickup significant gains over the next few years, they have a natural disadvantage against traditional local media properties – namely promotion, content and, perhaps most importantly, direct relationships with local marketers. But for the moment, pure-plays still rule by dint of having the largest share of the local media revenue pie, with 53.3 percent of all local online ad dollars, followed far behind by newspapers with 27.4 percent, directories (8.2 percent), broadcast TV (7.5 percent), and radio at 1.4 percent.
@davidaKaplan
Sep 17, 2008 8:06 AM ET
Posted In: Advertising, Media & Publishing, Newspapers, TV, Research & Metrics, Research
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