Stations Turn Apps Into Cash
Merely extending news brand to handhelds not enough for some
By Michael Malone -- Broadcasting & Cable, 12/7/2009 2:00:00 AM
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It's a start
If 2009 was the year when stations launched their iPhone applications, 2010 will be when many outlets aim to turn those apps—downloads offering real-time local news on various mobile devices—into real profit. Some have not waited for the new year to tackle revenue goals; LIN TV, for one, tallied nearly 29 million mobile impressions in the third quarter, a 54% spike over the second quarter of 2009.
That level of user buy-in gives the LIN sales folks real ammunition. “When you have that many people, it's now salable,” says LIN Senior VP of New Media Robb Richter. “Mobile is a real business, and it's growing every month.”
The smartphone market, which includes iPhones, Droids and BlackBerrys, is ablaze, and station executives desperately want their content on the devices (Station to Station, June 1). While they may not know exactly how to monetize their apps quite yet, local broadcasters are fearful of missing the mobile content boat.
The greater mobile media category's potential is vast. On Dec. 1, News Corp. Chairman Rupert Murdoch told an assembly at the Federal Trade Commission in Washington that mobile DTV is key to News Corp.'s growth strategy. A day later, it was revealed that several major station groups, including Hearst and Belo, are working together to get mobile DTV into users' hands more quickly.
BIA/Kelsey reported that digital out-of-home advertising revenues will grow from $2.2 billion in 2009 to $3.7 billion in 2013. “It's growing faster than anything else out there,” says Inergize Digital Senior VP/General Manager Jason Gould.
Stations' forays into the app space seem to resemble their efforts to launch Websites a decade or two ago: build the beachhead, and buy oneself time to figure out the revenue model. “Sometimes stations will grab a position just to be competitive, then find a way to make money on it,” says Crawford Johnson & Northcott co-founder Bruce Northcott.
But online revenue still represents a drop in the bucket for most stations, and many in local television remain skeptical that revenue derived from station apps—whether it's a sponsorship, overlay ads or, in rare cases, user fees—will amount to anything substantial in the near term. Mobile media watchers say a station in a midsize market might bag $25,000 to $50,000 a year in app advertising—though the right sponsor might buck up such a sum in one shot.
With stations continuing to struggle with lagging key ad categories on their core product, some bosses are wary of dedicating too much time and manpower to untested revenue sources. “There are few companies that I know of that have put the investment into it in this economy,” says SmithGeiger Senior VP Mark Toney, “or really understand what it takes to make it profitable.”
But as iTunes' 99-cent song model has shown, consumers are willing to pay for content they desire, and Gould says that apps represent a low-risk proposition for stations.
Inergize, part of Newport Television, offers partner stations a revenue share on its Mobile Local News product, so the upfront costs for stations to get in the game are negligible. Inergize recently launched apps for Dispatch Broadcast Group's WTHR Indianapolis and WBNS Columbus, bringing its affiliate total to around 80, almost all of them TV properties. (Other app vendors include LSN and News Over Wireless.)
According to Gould, the apps not only deliver branded local news to users' palms, but can also send content back to the station through a UGC platform. He believes that a station can derive real revenue through Mobile Local News with a bit of strategy.
“Can you make money? Absolutely,” Gould says. “Do you need to drive [mobile] downloads to make it happen? Absolutely.”
It's a start
Stations' success stories in the app arena are small but growing. KGPE Fresno sold its first sponsorship to a local jeweler in October. LIN has added national accounts on its apps since acquiring ad services firm RM Media this fall.
WTVT Tampa worked with Weather Decision Technologies to offer its MyFoxHurricane app at $3.99 a pop; around 3,000 were sold, and the number would have been much higher with a more eventful hurricane season.
As they peer into 2010, a number of station execs are raising expectations for their app strategy. Gray Television President/COO Robert Prather was pleased to see some 50,000 users download station apps in the 30 to 45 days after the group launched them.
“It's our theory that you've got to be where your audience is,” Prather points out. “If the audience wants to click on content on their iPhone, that's where we have to be.”
E-mail comments to michael.malone@reedbusiness.com
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Yes broadcaster needs to be there on I-phones etc, I respect Bob Prather at Gray, but today it's fool's gold internet-multicast is more real with a business model and with Comcast coming they both will be stronger!
Broadcasters need to explore all platforms there is no silver bullet!
Chip Harwood - 12/7/2009 1:53:34 PM EST
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