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What the New Television “Network” Means for Buyers

June 29th, 2017   ||    by John R. Osborn   ||    No Comments

The Federal Communications Commission (FCC) eased regulations on limits to broadcast station ownership on April 20, 2017. Then, within two and a half weeks, the Sinclair Broadcast Group outbid Fox and Nexstar to buy Tribune Media in a deal worth $6.6 billion, expanding its U.S. household coverage from 39 to 45 percent—and playing to a trend toward a new kind of television “network” seller.

The Economist outlines reasons why large, multimarket local TV station groups are still a strong business, including the biannual flood of political advertising and more leverage in fees coming in (retransmission fees) and going out (payments to parent networks for programming). But historically, national TV advertisers have spent their budgets with national networks, while local advertisers have bought through local stations. Only local or national advertisers with specific geographic needs could justify the premiums and workflow costs of multimarket local TV buys. But such buying patterns are now changing.

Research firm BIA/Kelsey said in a recent report: “One of the reasons that national marketers moved out of local is the cost and complexity of managing local activations at scale. But recent technologies and workflows have dramatically increased the efficiencies and effectiveness of localized marketing.” And The New York Times suggests local TV media companies will continue to grow. This will benefit not only owners and stockholders, but also offer new opportunities for advertisers.

Local Experience, Great Buys

To really optimize ad placement, local TV buyers would benefit from thinking about station groups as a new kind of TV “network” and taking advantage of their goals of capturing higher, multimarket budgets.

Here are some ways local buyers can find greater efficiencies and effectiveness in local market buys through the technologies mentioned by BIA/Kelsey:

  • The cumbersome process—and long lead times of one-on-one, back-and-forth negotiations with individual sales contacts at multiple stations in each market—is being transformed by automation technology companies like Videa, who are already working with these new kind of television “networks.”
  • Because local buyers on the agency or advertiser side understand the pricing and fluctuations of local marketplaces, they’ll have a natural advantage and ability to move swiftly and effectively on deals.
  • By being prepared to drive buys at a station group television “network” level—which is still customized to an advertiser’s multimarket list—the buy side can seize benefits in the more qualitative aspects of TV buying. These benefits include protecting brand safety and accountability by managing the advertising environment, program selection, added value at the market level, and relationships around reporting, make-goods, and/or troubleshooting.
  • Because station groups are programmers of news and entertainment in each market, they’re far more locally oriented and connected to their audiences than national sellers. And consumer connection is always the name of the game in advertising.
  • A station group “network” will be less likely to deal with a local advertiser as a commodity revenue source, which can sometimes happen with open-auction programmatic buys. Since many station owner groups are privately held and often family-owned, they’re able to grow while retaining stability and sensitivity to local marketplaces.

    It’s also important to remember that respect for both audiences and local advertisers can be lost with public, Wall Street-accountable national media conglomerates. That’s just one more reason local buys matter even in as station groups continue to grow.

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