NBC HAS HIGH HOPES FOR TRAFFIC TO ONLINE NETWORK: BUT LOCAL AD REVENUE PROJECTIONS ARE MORE MODEST

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NBC is issuing optimistic traffic estimates for its new local online network, NBC-IN, but its ad revenue projections are much more conservative.

NBC is telling its affiliates that stations in Top 10 markets will generate local advertising and sponsorship revenues of $225,000 in the second year. Stations will receive an additional $23,000 in revenues from online transactions originating in their market.

NBC projects that the average NBC-IN viewer will visit the site four times more often than the industry average. It also says that the site will launch attracting 5% of each market's total online audience-a higher user percentage than such established sites as Disney.com, CNN.com and MSNBC.com.

NBC PITCHING AFFILIATES

The projections are part of the pitch that NBC is making to its affiliated stations for NBC-IN, which plans a soft launch in September and a rollout in December.

Unveiled last month, NBC-IN is the network's online service geared toward affiliate Web sites. NBC will sell national advertising spots, while stations sell local spots. The network provides all national content, but the sites are built around the station's local identity.

Bill Bass, an analyst with Forrester Research, said many of the underlying assumptions of the plan were unrealistic. But the bottom-line revenue projections from NBC are realistic, he said.

"I may quibble with the assumptions," Mr. Bass said. "But don't think that these dollar figures are unreasonable."

As part of the NBC-IN affiliation agreement, stations will get 25% of net revenues from online sales generated within their market. Affiliates are required to promote their NBC-IN Web site with 10 on-air mentions and five 10-second on-air promos a week.

NBC projects that a local NBC-IN Web site will reach 5% of its total-market Net users, growing at a rate of 5% each quarter thereafter.

NBC is also projecting that the average viewer will access NBC-IN once a week, see eight pages per visit in the first year and stay an average of 40 seconds per page.

Marty Yudkovitz, president of NBC Interactive, acknowledged that the assumptions were aggressive and said the future of the Internet is still uncertain.

"Nobody can predict whether the Internet is going to be this decade's Hula-Hoop or the dominant form of media for the next century," he said. "But these are not pie-in-the-sky projections."

GREAT EXPECTATIONS

NBC also assumes that in a station's first year with NBC-IN, it will sell its local online advertising space at a $20 cost-per-thousand and sell out 50% of its local ad space-figures Mr. Yudkovitz said were below the CPM and sell-out rates of NBC.com.

By the fifth year with NBC-IN, the network assumes a CPM of $28, with 100% local sell-out.

NBC projects that an average affiliate in market No. 10 will earn $48,000 in online advertising revenue from NBC-IN in its first year. The network also expects that transactions between users and third-party content providers, such as Rent Net or Auto-By-Tel, will bring an additional $5,000 in transactional revenue.

By the second year, that projection jumps nearly 400% to $225,000 in local advertising revenue and $23,000 in online transactions.

For a smaller station in market 100, NBC projects first-year advertising revenue from NBC-IN will be $7,000 a year with an additional $1,000 a year in transactions. By the second year, the station will sell $31,000 in local ads and get $3,000 in transactional revenue.

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