The growth in local television's online advertising hit 41% in 2006 and the outlook for 2007 projects local online advertising to grow by as much as 55% across local markets, according to a new survey released today by TVB.

Entitled Benchmarking the Local Website Marketplace, the survey was the second annual effort commissioned by TVB and conducted by Borrell Associates Inc. Overall, it reveals that during 2006, local television stations sharpened their focus on the Internet, increasing their online ad revenues to $399 million. By the end of 2007, the report predicts, that figure could hit $618 million. The report states that "what was once viewed as cotton candy now seems to be a vital nutritional supplement to broadcasters' health."

The survey shows that many stations are using the Web as a publishing platform, taking aim at their newspaper and yellow pages rivals by offering classified and directory advertising and have gained nearly a point of share in the past year ("no small feat in the high-growth environment of local online advertising," the report says). Several stations captured more than 15 percent of all locally spent online advertising in 2006.

The survey showed that a total of seven categories comprised half of all online ad categories, and in particular, real estate, health, high-tech and automotive dominated.

The report recommends that local broadcasters: (1) rethink the mass-media mentality with an eye toward viewing the Internet as a mass of niches; (2) hire a dedicated sales force; (3) give strong consideration to launching a real estate section; and (4) consider spin-off sites that may not be branded to the station.

Among other findings, the survey reveals:

• TV station share of the local online ad market was 7% in 2006, up from 6% (+17%) in 2005 and 4% (+75%) in 2004.
• Local newspaper and radio Web sites share of local ad revenue declined in 2006. Newspaper sites went from 43% in 2005 to 36% in 2006 (-16%). Radio Web sites went from 4% of local ad spend in 2005 to 2% in 2006 (-50%). Other fast-growing segments are local paid search and e-mail advertising.
• A key driver of TV station ad growth was video advertising. In 2006, 72% of TV station Web sites sold video ads, and 80% plan to in 2007. Less than 33% of newspaper sites sold video ads in 2006.
• TV station Web sites grew revenue in all market size groups, with smaller markets continuing to generate the highest $ per DMA HH sales. In markets 100+ this figure was almost $1 per HH ($.96).
• Average per station online revenue is expected to reach record levels in 2007. The forecast for average station website ad revenues by market size are:

     Top 20 markets               $1,028,000*

    Markets 21-50                 $1,046,000*

    Markets 51-100               $   533,000*

    Markets 101-210            $   263,000*

    *New Record Average

•  Stations in smaller markets did a better job of grabbing online share than those in large markets, on average garnering almost four times more ad share. 

 To see the entire TVB/Borrell report, click here.