Close to 400 media and ad tech executives gathered in early March at Borrell Miami 2023. Themed “Navigating Local Media’s Brave New World” for this year, the conference is an annual look at new digital revenue opportunities and the latest strategies for media.
It’s a great measure and predictor of how different media categories will fare. For legacy media leaders, it’s also a wake-up call.
I’ve attended the Borrell conference seven of the past 10 years, and five of those have been as a representative of the newspaper, TV or radio industries. I listened with fear and trepidation about what was going to happen to my industries and how my ad dollars would be taken.
For the past two conferences, I have listened as an industry observer – a member of the LMA team. Not having to defend a media property or category is a very liberating feeling. Where before there was fear, I now see only lessons and opportunity. For example:
CTV is huge and getting bigger fast
Simulmedia CEO Dave Morgan’s keynote set the stage for the conference.
“There will be more video, more often, viewed by more people in more places and more time,” he said. “It will happen increasingly on television vs. prior consumption, which was on phones and desktop.”
Viewing hours for linear TV, which we know as broadcast or cable TV, will continue to decline as streaming hours increase. In 2022, total hours spent streaming surpassed linear for the first time. As viewing time moves from linear to streaming, the ad dollars will follow. TV ad budgets are now fungible, Morgan said, meaning they can be moved outside of buying just linear TV, to similar products like streaming.
Cross Screen Media CEO Michael Beach pointed out several key facts about Connected TV (CTV) consumption and ad rates. There is more supply than demand, meaning more ad availability than ads to fill those positions; so while CTV has the highest ad rates per thousand views (CPMs), it is still relatively cheap for the value it provides. CTV with targeting capabilities and virtually full completion rates — meaning the entire ad units are viewed vs. skippable video ad units — offers the lowest effective CPMs.
As an end user, you don’t really think about it or care where or how you’re viewing the programming. Hence why TV budgets are now fungible — the advertisers don’t care either.
What’s the difference between CTV and OTT?
CTV or Connected Television is video that is being viewed on a television set.
OTT or Over-The-Top is any video or audio delivered by IP or internet protocol.
CTV is OTT but not all OTT is CTV. The broader and more mature category of OTT video includes web, social and mobile video. The quality of its adjacent content is vastly different, much of which is subprime or not premium. CTV is synonymous with premium video content delivered to the television.
What’s the difference between linear television and streaming?
Linear TV is the broad term for over-the-air television or cable. Example: If you are watching your local ABC, NBC, CBS or FOX channel using an antenna or on local cable (Comcast, Spectrum, etc.) that is linear.
Streaming is video viewed on a device or Smart TV, and could include the same programming as linear TV but via the Peacock, Paramount, Hulu, Fox, NFL, MLB or other apps.
Why it matters: As a TV broadcaster, it’s important to move fast to get into the streaming ecosystem. Get your content over there, monetized and measured. One of the key quotes of the conference came from Dave Morgan: “If content is king, distribution is King Kong.”
Be fungible and fluid and make sure your entire organization understands all things linear and all things streaming. Today in local broadcast, anything streaming goes to the “digital people” and the core business focuses on getting the signal to air. That has to change to survive in the new world.
If you are a newspaper, radio and/or digital company, you have an opportunity to play and thrive in the new world. Sell CTV inventory. The ad rates and available inventory will dwarf anything else you can possibly do with your owned-and-operated digital inventory. It’s as easy to buy as search or social, and the profit you can claim is in the $15-$30 CPM range.
Retail media is the sleeping behemoth
Retail media now makes up 10% of all advertising revenue. Walmart made $2.7 billion in retail media revenue last year, which would make it as big as the largest traditional media companies.
Retail media is a retailer selling access to their shopping audience through retail signage, digital banner ads, coupons, email communications, and other owned media.
Samir Janveja, Amazon’s head of local channel sales, spoke of the multiple advertising opportunities Amazon offers local businesses across its retail media as well as ads on FreeVee, FireTV, Twitch, Alexa, Audible and the Amazon Ad Network. Amazon made $38.7 billion in advertising revenue last year, up from zero dollars 10 years ago.
Amazon, Walmart and other savvy retail media sellers can provide custom audiences created with their first party data and shopping behavior information – making them extremely valuable as the impending cookie deprecation weighs on the entire ad industry. CEO of Borrell Associates Gordon Borrell predicts that the death of cookies threatens $4 billion in local media digital revenue.
Why it matters: Retail media is a direct competitor for local ad dollars. Advertisers may value being in front of purchase-ready consumers more than news consumers. On the plus side, it may also be a source of inventory local media companies can sell into. If retail media was not on your radar, take a look at it. Amazon, Walmart and other major retail groups are making it easier for local media to participate.
Omnichannel selling is now
When the digital agency model emerged to follow the growing amount of digital spending outside of traditional media, I was not a supporter of the idea. I was of the mind that time spent selling other media took time away from making our owned-and-operated (O&O) better. Ten years later, I’ve changed my mind – partially because I’m not sure we can make it better. But more importantly, I fully subscribe to owning as many advertiser relationships as you can. Traditional media selling has media companies owing the relationships with only the local businesses who are interested in your medium. For all legacy media, that number is shrinking every day.
The common and overarching theme of the conference was omnichannel selling. Provide local businesses the full spectrum of marketing solutions to help them thrive. It may include TV, newspaper, radio or cable, but doesn’t have to. It also includes all the other media required for their entire marketing solution or across the entire customer journey. Borrell Associates Head of Research Corey Elliott said it best for local businesses: “They don’t want to buy a billboard or a radio spot. They want help.”
Why it matters: This is an incredibly disruptive opportunity for media companies, particularly if you are not the leader in the market. Several years ago, as a media company, your revenue ceiling was the amount of O&O media you controlled. Your circulation, your broadcast and digital audiences were as far as you could go. Today, the shift is in how many local business relationships you can “own” and how savvy you are at selling omnichannel campaigns – CTV, search, social, digital-out-of-home, retail media, etc.
Figure out how to sell to the long tail of local businesses
Coming out of the pandemic, there has been explosive growth of small businesses that have a company size of fewer than nine employees, with the bulk of that group being fewer than five employees. As these new businesses emerge, their use of the media mix is different from older businesses. They tend to buy fewer media types and rely more on digital products, partially because they’re more novice marketers who are more digitally savvy and comfortable using self-service tools on search and social media platforms.
The growth of the smaller businesses segment and the failures of the larger businesses during the pandemic has put more stress on media companies who have built their advertising base focusing on the more profitable end of the market.
Why it matters: Media companies have traditionally gone after only the larger companies in their markets and not addressed smaller advertisers. They’ve also taken an O&O media sales approach – not tapping into smaller businesses’ overall marketing budgets, which collectively may be significant. Media companies must find a way to address smaller advertisers – or said another way, get more advertisers. Most media companies engage with less than 1% of all the businesses within their geographic footprint. See previous comment about omnichannel sale competencies and strategies.
Leaning into the influencer wave
Salem Media Group’s Senior Vice President Mike Reed detailed the origin story of the Salem Influencer Network starting with a single creator. In three short years, Salem has grown its influencer revenues to nearly match its revenue for radio media.
Salem Media stayed within its core competency — faith-based media — and leveraged its advertiser relationships to offer new marketing and distribution opportunities beyond its core radio footprint. At the same time, Salem hired the right people to run the influencer network and give credibility to the new venture. It’s a classic example of when preparation meets opportunity.
Why it matters: This has nothing to do with news or radio. As media companies try to monetize news or O&O inventory, sometimes you have to look at your core assets and figure out the best possible uses. Salem Media used its advertiser relationships, trusted brand and faith-based category strength and built something great. It can fund local news, but it doesn’t have to be about monetizing news.
In summary, coming away from the Borrell Miami 2023 conference, I see only opportunity:
- CTV is a gold mine, and everyone can tap into and participate no matter the industry.
- The future of local media is about how many advertiser relationships you can own, and how well you can help advertisers. Media reps must dominate omnichannel selling, including the emerging opportunity with retail media. If you continue to be a unichannel seller (not sure if that’s a word, just made it up) and focus on selling just print or just TV, you will live and die with that industry.
- Learn to address and engage with more local businesses, especially the newer and smaller ones, as that is where the bulk of the growth will come from. They also need the most help and will value a trusted relationship going forward.
- Last, leverage core assets to build a profitable adjacent business. Use that money to fund your news organization.
Who’s Guy Tasaka?
Guy Tasaka is the managing director of the LMA Technology Resource Center and an industry veteran with diverse experience working in national media, media technology start-ups and local broadcasters and news organizations.
As part of its 2023 key initiatives, the LMA Technology Resource Center will launch three technology cohorts covering digital editions, mobile publishing and streaming audio. Led by Guy, cohorts will revisit financial models, identify technology gaps that could exponentially increase revenue, and investigate competencies that may not exist within the organizations, but are needed.
The cohorts will be a maximum of 10 media companies per group, and each will attend four one-hour sessions spread over eight weeks.
Email firstname.lastname@example.org to get on the list of interested media companies, and stay tuned for the public announcement for open signups.