• by Wayne Friedman , David Goetzl  @dgoetzl, April 2, 2009

The sliver of good news for TV stations is that digital and interactive advertising sales continue to soar.

In 2008, broadcast TV stations pulled in $1.03 billion, a 36% climb over the year before -- this according to the Television Bureau of Advertising from data gathered by research Borrell Associates.

Projections are that stations will see somewhat less, but still strong growth in 2009 -- a 26% climb to $1.3 billion. Borrell examined nearly 4,000 local Web sites, from 718 TV stations. The study says overall local online advertising will continue to climb until 2011, projecting a total of $16 billion. It will then fall back the following two years, sinking to $15.5 billion. Local TV Web revenues are expected to rise to $1.8 billion by 2011.

However, TV stations are not pacing as fast as the local online advertising market overall. The entire local online advertising market was estimated to be $12.6 billion in 2008, up from 46% in 2007.

Some of the TV online results were uneven according to market size. Top 20 markets grabbed growth rates of 65%, on average. But mid-size markets -- size number 21 through 50 -- saw revenues decline 3%.

Smaller markets 51 through 210, however, had big improvement -- with average-per-station revenue increases of 33%. Just 5% of all stations made $3 million or more from Web revenues, while 78% made less than $1 million.

Gordon Borrell, CEO of Borrell Associates, said in a release: "We see a handful of stations capturing five, 10, even 13 times the market share of local online advertising as their TV peers. They are obviously doing things differently, beyond the broadcast upsell to the Web."

Borrell said that locally run TV sites continue to gain ground on newspaper sites, beating out the largest newspaper sites in 22 of the 80 markets surveyed. That's an improvement from the 16 markets of a year ago. The heaviest use was in the Top 10 markets, where stations reported a 65% increase in Web revenues in 2008. The average per-station revenue in those large markets took in $1.4 million.

However, the report noted that auto dealers "earmarked" 28% of their spending last year for the Web, and many of those businesses have now gone out of business. Another potential hurdle was flat or declining spending in the latter part of 2008, in line with the economic downturn. Furthermore, station sites continue to rely heavily on banner ads, where effectiveness is now being called into question.

Still, the report suggested that growth opportunities come in selling pre-roll and other ads to accompany the increasing amount of video on station sites -- or from "infomercials" slotted within a directory or classified ad section.

Internet revenues provided in the report were gathered from a survey of some 718 stations. That is 184 stations more than last year's Borrell report, perhaps helping fuel the aggregate year-over-year increases.

Borrell says don't expect "call-letter" sites to lead the growth. "A plethora of new brands began emerging on the Web last year, distancing them from exclusive concentration on local news, weather and sports and focusing instead on specific categories of interest, such as entertainment, politics, automotive and local commerce."

Notably, in 22 markets, a TV station site drew more traffic than one for a local newspaper: WFAA in Dallas outperformed DallasNews.com; KUSA in Denver topped DenverPost.com; and WRAL.com outdrew NewsAndObserver.com in Raleigh. (The figures cover only visitors within the DMA and do not count those checking in from out of town.)

The report offered several recommendations to stations to boost Web sales, notably hire one dedicated salesperson for every $250,000 in gross revenues targeted -- so a goal of $1 million would necessitate four people.

It also indicated that using brands and Web addresses that are distinguished from station call letters.com can be helpful, perhaps creating a local portal in consumer minds.

That trend has been in place for several years, but has picked up -- notably with NBC Universal's 10 stations now carrying URLs, such as NBCSanDiego.com and NBCLosAngeles.com. Nexstar, the mid-size station group has moved aggressively to jettison call letters from URLs, offering monikers such as ArkansasMatters.com for the NBC affiliate in Little Rock, and RochesterHomePage.net for its CBS-Fox duopoly in Rochester.

Station groups are also branching out and launching stand-alone lifestyle sites distinct from news-, weather- and sports-oriented destinations.

Not all publicly traded station groups report Internet ad revenues in the same way. For example, Hearst-Argyle said 2008 net digital media revenues, which include Internet and mobile, were flat at about $20.9 million. They fell in the fourth quarter from $6.6 million in 2007 to $5.4 million last year.

Hearst-Argyle has also taken on station Web brands distinct from call letters in several markets, such as TheBostonChannel.com for the ABC affiliate, but has stayed with call letters.com for the bulk of its outlets.

Gray Television, which operates affiliates in the type of small- to mid-size markets where Borrell said stations have had success with Web sites, has stayed with call letter.com IDs. The company said pure-play Internet ad dollars increased 3.6% to $11.9 million in 2008 and by 3.4% to $3.2 million in the fourth quarter.

Lin TV, whose portfolio stretches from a triopoly in top-25 market Indianapolis to much smaller stations, reports "digital revenues" including lucrative retransmission consent payments. As such, its revenues jumped 95% last year to $29.1 million, perhaps a bit deceiving as far as divining Internet ad dollars.

Nexstar said what it terms as "eMedia" revenue doubled in 2008 to $10.2 million.

The study says overall local online advertising will continue to climb until 2011, projecting a total of $16 billion. It will then fall back the following two years, sinking to $15.5 billion. Local TV Web revenues are expected to get to $1.8 billion by 2011.