Local-direct businesses must become a major financial resource for each community as well as the direction of TV stations going forward! Philip Jay LeNoble, Ph.D.

COMMENTARY

Local TV's Big Ad Fight: Digital Media Delivers Competitive Punch

• by Wayne Friedman , Staff Writer, May 13, 2021

Big digital media companies -- social media and otherwise -- seem to have an uneasy marketing and content connection with local TV stations. Should we really believe digital will always benefit from those longtime local media outlets? Probably not so much.

A report conducted by BIA Advisory Services says Google and Facebook algorithms tend to result in under-compensating TV news stations contentby $1.9 billion per year in value -- especially with regard to local TV content on digital platforms where consumers will hopefully click through to TV stations' sites.

Sometimes, consumers don’t click through -- but this doesn’t mean digital media walks away empty-handed. Google and Facebook still sell advertising around this content.

In addition, content on digital platforms can sit around other iffy journalism content. That can lower "value."

All this doesn’t do much good for TV stations that are increasingly dependent on original TV news content.

So what is really going on?

Well, this is Google and Facebook. Lots of walled gardens of data and privacy on these platforms don’t always clarify things for traditional and competing media -- intentional or not.

It has been incumbent on TV stations to strike out on their own to bolster new sources of revenue -- especially with new locally and regionally based OTT operations, where local TV marketers can extend their reach for advertisers. This is an area in which Tegna’s Premion, Sinclair’s CompulseOTT and Fox Corp.'s new FLX operate.

BIA Advisory Services estimates local OTT ad spending will total $1.2 billion this year, $1.6 billion in 2022; and $1.8 billion in 2023. But these ad-revenue gains aren’t exclusive to local TV station groups.

The BIA’s estimate also includes geotargeted/local-regional ad deals on Roku and Hulu. Many TV based and other local OTT ad operations have ad-share revenue deals with publishers' inventory.

These local OTT revenue projections are in addition to the estimated $1.5 billion local revenue TV stations make selling their own digital media inventory -- on their own site/mobile platforms.

The question is how fast these alternative digital revenue streams can grow -- especially for local TV stations' business, which is still traditionally dependent on live, linear TV. Now sinking to around $15 billion in ad revenue per year, this was $18 billion to $20 billion a few years ago.

Take note -- TV stations do see major advertising growth every other year from political marketing and advertising -- a record $3.5 billion for broadcast TV for 2020's presidential election (virtually all on local TV), according to Kantar.

But big-time competitors are hot on their heels. Digital media  took in $1.8 billion in political advertising last year.

All of which brings us back to you-know-who. Google and Facebook are looking to overcompensate on everything.