The Digital Threat to Local Television Markets

See the Video: NBC's Beth Comstock Warns Station Operators

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NEW YORK (AdAge.com) -- New digital video distribution technologies pose a dire threat to local TV stations and owner/operators must move rapidly to protect their businesses, attendees at last week's Television Bureau of Advertising Marketing Conference were told.

Serious business
Addressing the annual one-day gathering at New York's Jacob Javits Convention Center, Beth Comstock, president for digital media and marketing development at NBC Universal, warned station operators that they had to move quickly to develop in-depth digital capabilities for content and advertising and that "this isn't just about driving growth, it's about staying in business."

The Television Bureau of Advertising is a national trade organization of broadcast groups, ad sales agencies and more than 500 TV stations across the country. The group's focus is primarily on the local broadcast and advertising business. Local TV stations have been among the media entities that have responded least aggressively to the rise of the Internet and the emergence of new kinds of digital device networks -- from portable game consoles to cellphones and iPods -- that are revolutionizing the distribution of video-based entertainment content.

Market changes
As the keynote speaker at the event, themed "Television Goes Multi-Platform," Ms. Comstock emphasized that local TV operators can no longer be casual observers of the dramatic market changes being wrought by consumer-controlled digital technologies.

"No matter whether you're an entertainment company or a local television station, most of us here aren't talking about just weathering a storm," she said. "What we're talking about is jumping into a raging river. That's our challenge. Which means that all of us, every one of us, has to figure out a way to participate in a booming online market, to develop digital capabilities right to the core, and make our content much more interactive."

"We need to focus on local content creation," she said. "Most stations have at least 50% of their broadcast time when they schedule their own programming. That's a lot of free time. So, the more you can create original, local programming that makes that connection, the more you're going to be able to capitalize on that local bond."

Original programming
"And a word about original programming. This is something we're struggling with at NBC. It's not just enough to repurpose your content and put it on new digital platforms. The challenge for all of us -- really it's the ultimate challenge -- is how do we develop good content that's going to be right for the right medium?"

"Advertisers will be there [on alternate digital platforms] for you. We know that. They will go where the eyeballs are. But just as important, they will go where they know their brands are going to be enhanced.

"So, look, there's a lot to figure out. Audience measurement becomes incredibly challenging. There are questions on ad effectiveness, engagement, optimization and consumer behavior -- things that we all haven't had to deal with, but that the digital age is ushering in. I think working with the ad community there's a tremendous opportunity to collect and analyze and figure this out together.

"Let's face it," she said, "the opportunity is tremendous. Local advertising is a $94 billion dollar market. You've get about 30% of it. The local online market is a $3.4 billion dollar market and you get about 4%; this represents an $850 million opportunity for local television. That's exciting. That's real money.
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