Local TV Turns to the Web

(MoneyWatch)  Times are tough for all media, and local TV stations are no exception. But there are some promising online revenue trends for local stations that, while not substantial enough to offset double-digit revenue drops predicted in 2009, will at least soften the blow.

Local television ad revenue will drop about 6 percent in 2008, or roughly $1.5 billion, according to the Television Bureau of Advertising. Local web site revenue, on the other hand, stands to reach roughly $1 billion this year, replacing one-third to half of the television decline.

It will be a while before online revenue fully makes up for lost traditional revenue streams, but the increasing shift to online advertising gives station managers hope.

Ad revenues for TV station web sites have increased steadily for years. In 2003, for example, TV stations racked up $75 million in web site ad revenues, according to Borrell Associates. In 2007, that number had reached $772 million, a 73 percent increase compared to the previous year. The 2007 growth is expected to increase by 45 percent in 2008.

In addition, since 2004 the share of local online ad spending for stations has jumped from 1.9 percent to 9.5 percent, while newspapers and directories have seen their shares fall dramatically. These figures are convincing station managers to invest more in their web sites -- not an easy feat in an industry that has long resisted the shift in media consumption.

Local stations are working increasingly with the auto industry to protect their business, using web site display ads, listings, and mobile cell phone advertising to protect their shares, says Jack Poor of vice president of advertising for TBA. And local stations, unlike newspapers, are also increasing revenue incrementally by selling to local advertisers who traditionally haven't purchased TV air time.

"The stations are active in developing new local business from categories like hospitals, retail and local service providers," says Poor.

Some more promising news for TV stations amid economic turmoil: media consumption tends to rise when the economy goes sour. And this recession is no exception: Americans are viewing more television than ever.