OTT-CTV Deals Vital To Local TV Ad Efforts

Local TV station groups are finding part of their future depends on adapting TV stations’ advertising units to selling OTT video impressions -- on apps/platforms not necessarily their own.

NBCUniversal is starting up an effort called NBC Spot On, which will not only sell its advanced advertising opportunities on 42 of its NBC and Telemundo TV stations and digital assets -- but will also sell other non-owned local OTT/CTV impressions. In its initial announcement, it did not disclose specific OTT details.

NBCU joins other TV stations groups -- Sinclair, Nexstar Media Group and Tegna -- that have set up similar operations in recent years.

On the same day NBC Spot On was announced, one of the older OTT/CTV ad selling businesses, Tegna’s Premion, made a minority equity deal with Gray Television. It will let Gray TV ad executives in its 93 TV stations sell the OTT/CTV advertising inventory from some 125 networks/apps on the Premion platform.



TV stations continue to look for ways to expand already existing advertising selling staff/resources -- this as non-TV digital media platforms continue to take advertising dollars from legacy local TV stations.

Here’s why: Projections are that legacy local TV advertising revenue will see slight or no gains over the next few years -- $20 billion (2020); $19.1 billion (2021); and $20.1 billion (2022), according to BIA Advisory Services.

BIA Advisory also projects digital media share of local broadcast TV ad revenues will be 8% this year -- growing 9% each of the next two years. Local online video will be $2.4 billion this year and $2.8 billion next year; local over-the-top local video, $1.1 billion in 2020 and $1.3 billion, in 2021.

For example, Nexstar Media Group, now the largest TV station group, reported total digital media revenue in 2019 was $241.5 million, representing 8% of its overall 2019 revenue of $3.03 billion. Digital media revenue was down 7.5% from 2018.

Are these numbers good, bad, or just mediocre? Many big TV stations still count on other faster-growing revenue buckets -- retransmission fees and political advertising to name two. Is that near-sighted of them?

Local TV stations look longer-term to newer digital TV interfaces for their linear TV stations. The new NexGen (former ATSC 3.0) standard will, in theory, allow stations to compete with slicker new non-TV owned, locally-focused digital media. This is expected to provide better engagement and advertising revenues than current legacy systems.

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