Many are worth hundreds of millions of dollars
By Heidi Dawley Sep 26, 2008
The news is out, and none of it's good for traditional local media. Newspapers, TV, radio and magazines all took hits in ad revenue in the first half of 2008.
But one local medium is doing extraordinarily well: the internet. Ad spending continues to surge, and now a new report is out saying that local web sites are hot properties, some worth hundreds of millions of dollars, even though many are still turning small profits.
“To some extent this has taken a lot of people by surprise because these internet operations started small and as marketing extensions of a core product rather than independent business ventures,” says Gordon Borrell of Borrell Associates, an online advertising research firm, which did the report with BIA Financial Network, a financial data company.
“Now 14 years later people are saying ‘Wow, these companies are not only generating millions of dollars, but profits too,’” he says.
Certainly part of their value is the strong growth still ahead. Borrell is forecasting 50 percent growth in ad revenue this year, and that's as overall online growth has slowed considerably. TNS Media Intelligence reports that total internet spending for first-half 2008 rose just 8 percent.
Borrell and BIAfn set values on 3,200 local sites after analyzing their revenues, expenses and growth trends, and included in the study were sites of the big local newspapers, local TV and radio stations, and so-called pure-plays, sites started from scratch without any affiliations to existing media properties, such as Atlanta.com.
The sites of local papers have the highest revenue and valuations, and the largest were given values between $300 million and $450 million, with the median value at $3.5 million.
But interestingly TV stations were given valuations nearly as high, with a median value of $3.1 million, even though they generate far less revenue. Median revenue for TV sites was $450,000 versus $715,000 for newspaper sites.
The reason? TV station sites attract more lucrative forms of advertising, which had lead to higher growth rates. The study reports that newspaper site revenues grew some 33.5 percent from 2002 to 2008, while TV sites saw growth of 67.2 percent.
Newspaper sites tend to sell banners and listings, while TV sites focus on streaming video and paid search advertising, both of which are growing quickly.
Pure play and radio sites also rely on faster-growing types of advertising.
The pure plays have a median revenue of $300,000 and are valued at a median value of $2.4 million. Radio station sites had a median revenue of $165,000, and were found to have a median value of $1.2 million.
“You would think the more valuable ones would be the ones making the most money. But it is not true. The ones that have the highest multiples are the ones sitting on what are like undeveloped beach front properties," says Borrell. "The multiples for the city.com sites, which are seen as untapped mines, are high.”
But the internet being the internet, all this could change. Now newspapers are getting into video advertising, in competition with TV, as well as interactive yellow pages directories. Both areas could lead to faster growth.
“So I think that there is a good future for them,” says Borrell.
***
Meanwhile, in online ratings for the week ended Sept. 14, according to Nielsen Online, Google was the top parent company, followed by Microsoft, Yahoo, Time Warner and News Corp. Online. The top five brands were Google, Yahoo, MSN/Windows Live, Microsoft and AOL Media Network.
Experian Group Limited held the top advertiser spot with 2.9 million impressions, while Netflix was No. 2 at 1.9 million. Yahoo was once again the top advertising site with 14.1 million ads served, with MSN No. 2 at 2.6 million.
Sessions per person per week rose, from 16 to 17, as did domains visited per person, from 40 to 41. PC time per person was up 6 percent from the previous week to 18 hours and 47 minutes.
Top 25 parent companies Through Sept. 14
#
Parent
Unique Audience (000)
Reach %
Time Spent per Person (hh:mm:ss)
1
Google
95,896
67.9
0:37:30
2
Microsoft
87,411
61.9
0:50:22
3
Yahoo!
79,945
56.6
1:12:30
4
Time Warner (Division)*
57,088
40.4
1:24:27
5
News Corp. Online
45,760
32.4
0:42:48
6
eBay
33,931
24.0
0:48:15
7
InterActiveCorp
32,581
23.1
0:11:33
8
Walt Disney Internet Group
26,779
19.0
0:26:34
9
Landmark Communications
26,591
18.8
0:12:09
10
Amazon
25,539
18.1
0:14:54
11
Wikimedia Foundation
25,190
17.8
0:09:59
12
Apple Computer
24,472
17.3
0:25:20
13
Turner Network (Division)
23,895
16.9
0:21:21
14
CBS Corporation
22,224
15.7
0:18:01
15
New York Times Company
21,878
15.5
0:11:05
16
Facebook
20,707
14.7
0:43:29
17
AT&T Inc.
17,913
12.7
0:23:12
18
RealNetworks, Inc.
15,513
11.0
0:15:52
19
CraigsList
15,240
10.8
0:33:57
20
Verizon Communications
14,856
10.5
0:22:10
21
Viacom Digital
13,859
9.8
0:23:01
22
E.W. Scripps Company
12,909
9.1
0:07:51
23
Glam Media
12,903
9.1
0:11:38
24
Comcast Corp.
12,815
9.1
0:31:50
25
Gannett
12,282
8.7
0:12:00
Source: Nielsen Online
Top 25 brands Through Sept. 14
Parent
Unique Audience (000)
Reach %
Time spent per person (hh:mm:ss)
1
Google
86,746
61.4
0:27:34
2
Yahoo!
78,683
55.7
1:13:08
3
MSN/Windows Live
67,474
47.8
0:52:20
4
Microsoft
54,902
38.9
0:15:48
5
AOL Media Network
51,187
36.2
1:31:29
6
YouTube
40,914
29.0
0:24:17
7
Fox Interactive Media
39,965
28.3
0:43:11
8
eBay
27,948
19.8
0:49:58
9
Wikipedia
24,803
17.6
0:10:05
10
Apple
24,472
17.3
0:25:20
11
Weather Channel
24,052
17.0
0:12:40
12
Facebook
20,707
14.7
0:43:29
13
Amazon
20,566
14.6
0:14:45
14
Blogger
19,790
14.0
0:06:30
15
CNN Digital Network
19,445
13.8
0:21:26
16
Ask Search Network
19,036
13.5
0:10:32
17
Real Network
15,508
11.0
0:15:52
18
Craigslist
15,185
10.8
0:34:00
19
AT&T
13,800
9.8
0:27:02
20
About.com
13,750
9.7
0:03:27
21
Glam Media
12,903
9.1
0:11:38
22
ESPN
11,845
8.4
0:30:55
23
Bank of
America
11,657
8.3
0:22:51
24
Comcast
10,227
7.2
0:38:05
25
Verizon
9,250
6.6
0:19:24
Source: Nielsen Online
Top 25 advertisers (excludes house ads)
Through Sept. 14
#
Company
Impressions (000)
1
Experian Group Limited
2,865,512
2
Netflix, Inc.
1,875,888
3
Scottrade, Inc.
1,339,781
4
Verizon Communications, Inc.
1,210,810
5
AT&T Corp.
989,556
6
InterActiveCorp
694,780
7
United Online, Inc.
665,960
8
Sprint Corporation
621,102
9
Deutsche Telekom AG
586,686
10
ALLTEL Corporation
575,785
11
General Motors Corporation
535,756
12
Monster Worldwide, Inc.
459,549
13
Fandango, Inc.
453,959
14
Vonage Holdings Corp
447,453
15
Mighty Net, Inc
431,622
16
Dell Computer Corporation
412,701
17
NexTag, Inc.
406,950
18
Microsoft Corporation
367,859
19
Bank of America Corporation
356,231
20
E*TRADE FINANCIAL Corp.
355,641
21
Apollo Group, Inc.
340,439
22
Washington Mutual, Inc.
332,683
23
Time Warner Inc.
309,139
24
Weight Watchers International, Inc.
302,605
25
Best Western International, Inc.
297,718
Source: Nielsen Online, AdRelevance
Note: Nielsen Online, AdRelevance service estimated online advertising expenditures account for CPM-based image-based advertising. All reported estimated expenditures and impressions do not account for the following placement types: text only, paid fee services, performance-based campaigns, sponsorships, barters, in-stream ("pre-rolls") players, messenger applications, partnership advertising, promotions and email campaigns. AdRelevance currently does not report estimated spending for paid search advertising. Also, Nielsen Online, AdRelevance reporting data reflects advertising activity served on pages accessible via the World Wide Web and not within AOL's proprietary service.
Top 25 advertising sites (excludes house ads)
Through Sept. 14
Company
Impressions (000)
1
Yahoo!
14,111,858
2
MSN
2,565,961
3
MySpace
1,850,983
4
MSNBC
1,812,250
5
Comcast.net
1,730,853
6
AOL.com
1,017,986
7
FOXNEWS.COM
756,934
8
eBay
607,617
9
Facebook
495,815
10
The Weather Underground
494,647
11
The Weather Channel
463,736
12
ESPN.com
451,991
13
Juno
429,707
14
IMDb
355,602
15
CNN
336,279
16
Amazon
313,464
17
Photobucket
306,324
18
YouTube
278,620
19
Project Playlist
274,299
20
TheStreet.com
267,362
21
NetZero
248,149
22
AT&T Worldnet
225,469
23
Pogo
212,046
24
CBS SportsLine
210,771
25
Drudge Report
207,638
Source: Nielsen Online, AdRelevance
Note: Nielsen Online, AdRelevance service estimated online advertising expenditures account for CPM-based image-based advertising. All reported estimated expenditures and impressions do not account for the following placement types: text only, paid fee services, performance-based campaigns, sponsorships, barters, in-stream ("pre-rolls") players, messenger applications, partnership advertising, promotions and email campaigns. AdRelevance currently does not report estimated spending for paid search advertising. Above data does not include any house advertising activity. Also, Nielsen Online, AdRelevance reporting data reflects advertising activity served on pages accessible via the World Wide Web and not within AOL's proprietary service.
