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Local Online Advertising Market Opportunities

After taking knocks from upstart digital media companies, traditional local broadcasters are starting to receive benefits from the next wave of new media development, according to speakers at a Kagan Summit in New York City.

Kagan Research forecasts that radio and TV stations will generate $1.7 billion in 2007 revenue from online media sources -- which will deliver double-digit growth in the years ahead. That covers station-owned websites, multicast channels in digital broadcasting, podcasting and station content monetized on third party platforms, including budding wireless broadband media.

Selling digital platform ads and drilling deeper for local advertisers that never bought broadcasting before could bring completely new ad revenue.

Tapping new prospects is crucial because ad revenue from traditional advertising is trending flat. Excluding the online/digital upside, TV station's $44.9 billion in 2006 total ad billings, and radio station's $20 billion in ad billings, cycle up and down significantly based upon events like election and Olympic years.

Last year, Kagan estimates new media revenue contributed 2.7 percent of all ad revenue at radio and TV stations. Local advertisers can create their own ads using the self-serve tools available via websites, which relieves stations of time consuming account service and ad creation work for the smallest advertising accounts.

Digital media is not a cake walk to riches because operating websites and enlarging local content creation raises broadcast station expenses. But speakers said broadcasters seemed to have turned a corner by holding their own amid the bombastic arrival of fast-growing new digital media rivals, such as subscription satellite radio and the Internet.

I believe that the greatest challenge for traditional media people will continue to be moving beyond their legacy mindset. Carrying over their dysfunctional habits into the digital media realm will produce equally uninspiring work that's devoid of innovation.

The creative talent that's schooled in a traditional ad agency environment often produces the most consistent high-cost low-impact material that's proven easy to ignore.

In contrast, the alternative and independent freelance talent -- that isn't mired in conventional wisdom -- shows the most promise for low-budget local advertisers who don't want to mimic the poor ROI of big-budget marketers.

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