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Local TV Ad Revenue: 6 Reasons to Smile in 2018

December 20th, 2017   ||    by Susan Kuchinskas   ||    No Comments

Prospects for local TV ad revenue are strong, thanks to a healthy economy and technology that lets stations expand their offerings and improve results for advertisers.

The Consumer Confidence Index is at a 17-year high, according to The Conference Board. Consumers feel that business conditions are good and jobs more plentiful. This translates into higher consumer spending—and higher spending by advertisers to capture those consumer dollars.

Of course, there’s plenty of competition among advertisers. Here are six reasons we think local TV ad revenue can be a healthy piece of the pie at year’s end and into 2018.

1. Holiday Advertising

“Consumers are entering the holiday season in very high spirits and foresee the economy expanding at a healthy pace into the early months of 2018,” reports The Conference Board. Holiday ad budgets and media buys were set months ago. Smart ad reps were able to lure local and national advertisers with multiplatform campaigns and—if they had the capabilities—improved reporting and targeting.

2. Political Advertising

The Cook Political Report forecasts that television will again gain the lion’s share of political advertising in 2018. With 42 House seats and nine Senate seats in play next year—plus 17 governorships up for election—Cook predicts spending of $2.4 billion for local broadcast and $850 million for local cable.

How much local TV ad revenue will accrue to any particular station group depends on how hotly contested that locale’s elections are, as well as whether there are local propositions. TV stations should treat these bucks as a windfall and spend them wisely.

3. Programmatic Buying

Programmatic buying platforms are becoming a key component of modern TV advertising, allowing stations to offer improved reporting and targeting. As more stations adopt this approach to selling, they may be able to win back some ad dollars from digital, according to analyst firm BIA/Kelsey. Better targeting and improved return on investment (ROI) are the value propositions that will ultimately let stations using programmatic compete.

4. ATSC 3.0

The Federal Communications Commission approved the voluntary rollout of this next-gen TV standard on November 16, and the National Association of Broadcasters (NAB) called it “the beginning of a reinvention of free and local broadcast television in America,” according to Broadcasting & Cable.

BIA/Kelsey is bullish on this new standard, saying stations that invest in this upgrade can recoup their costs within three years, thanks to the new business models it allows. ATSC 3.0 will let broadcasters morph into “content distribution services,” according to the analyst firm.

In addition, they’ll be able to offer better ad targeting and tracking. For example, linear ads in live broadcasts can be replaced with targeted ads based on geography or demographics.

5. Cross-Platform Advertising

ATSC 3.0 will let TV stations do a better job of creating multiplatform campaigns. TV News Check reports that, according to BIA/Kelsey, cross-platform and addressable advertising opportunities resulting from the upgrade could boost the annual compound growth rate of local TV ad revenue from 3 to 5 percent.

6. Social Media

Local stations are using social media platforms to both grow on-air viewership and deliver content. BIA/Kelsey’s analysis found that a strong social presence can aid mid-market stations as well as stations in top designated market areas (DMAs). Share Rocket, a social-media research firm focused on local TV stations, says that sponsored content on social media could add $1.4 billion in local TV ad revenue in 2018, according to MediaPost.

It’s a changing media world, and 2018 will continue to see new competitors, shifts in viewing habits, and advances in technology—all of which will let savvy local stations contend for advertisers’ budgets and viewers’ attention.

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