Every broadcaster recognizes that digital media technologies are transforming the business. It’s a gold rush to win the billions of dollars available in digital ad revenue. The key to success? Cross-platform digital strategies that offer advertisers and consumers valuable integrated solutions. This presentation, made to the Texas Association of Broadcasters 2014 Convention & Trade Show, discusses how radio stations can exploit their local promotional appeal and local sales force to produce cross-platform campaigns that add significant value to a station’s digital business. The session, expanded on the following topics: • Local Market Forecast. Where will local radio and television be in five years? We will share findings from our national and local ad forecasts and examine where the top five business categories are spending dollars. • Ad revenue drivers. Small and medium-sized businesses (SMBs) are becoming the backbone of today’s local radio and television advertising revenues. We will discuss how to capitalize on this trend and drive revenue. • Cross-Platform Selling. Small businesses are moving their advertising to the Web. Radio and television broadcasters are uniquely positioned to serve SMB accounts on air, online and on mobile. We’ll share what stations must do to mobilize their local sales force so they have a full understanding of the digital elements necessary for a successful campaign. • Mobile. More Americans are using their mobile phones as their primary source for news. We’ll share findings from our own consumer shopping research and discuss the top three ways broadcasters can tap into this opportunity and leverage their news content on mobile.

1. The Local Media &Advertising Experts
Digital Innovations in Local
Radio and Television
Mark R. Fratrik, Ph.D.
Senior VP, Chief Economist, BIA/Kelsey
Texas Association of Broadcasters
August 7, 2014

2. © 2014 BIA/Kelsey. All Rights Reserved.
2
BIA/Kelsey at the Center of Local
 BIA/Kelsey is the leading research and advisory company
focused on the local advertising marketplace.
 Our goal is to help companies leverage the exceptional business
opportunities in local media to solidify their leadership position.
 Our research-driven data helps our clients make the
right decisions, every day.
 Industry Forecasts
 Local Market Ad Reports
 Consumer Research
 Advertiser Research
 Mobile, Social, Video Trends U.S. Local Media
Forecasts

3. © 2014 BIA/Kelsey. All Rights Reserved.
3
© 2014 BIA/Kelsey. All Rights Reserved.
Overview of Talk
Local Media Market Forecast: Where will Radio and TV be
in 5 Years? What will be the top Business Categories
Spending on Local Radio and TV Stations.
Drivers of Ad Revenues: What is the growing importance
of SMBs?
Cross-Platform Selling: What are Radio and TV stations
doing to capitalize?
Mobile: Its growing importance and how Radio and TV
stations can take advantage of it.
3

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4
National Overview
Total U.S. Spending In Local Markets
4

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Definition
BIA/Kelsey defines the local media advertising marketplace as all
media generating revenues by selling paid media access to local
audiences to all types of advertisers. “Local” audience advertising
sales include buys specifying local and regional markets.
 Newspapers
 Radio
 Local Video
 Over-the-Air Television
 Cable Television
 Out-Of-Home
 Direct Mail
 Directories
 Local Magazines
 Online
 Mobile
 Social
Categories

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6
Local Media Five-Year Forecast
$133.2
$138.0
$140.7
$147.1
$151.5
$158.6
$120
$125
$130
$135
$140
$145
$150
$155
$160
$165
2013 2014 2015 2016 2017 2018
US$Billions
Source: BIA/Kelsey U.S. Local Media Forecast (2013-2018)

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Local Ad Market Currently
Dominated by Traditional Media
Newspapers Print
13.5%
Newspapers Online
2.4%
Direct Mail
27.9%
TV O-T-A
13.8%
TV Online
0.5%Radio O-T-A
10.7%
Radio Online
0.4%
Print Yellow Pages
3.4%
Internet YP
1.6%
OOH
5.8%
Cable
4.8%
Magazine
1.5%
Magazine Online
0.2% Online/Interactive
9.9% Email
1.4%
Mobile
2.2%
2013 U.S. Local Media Revenues — $133.2 Billion
Source: BIA/Kelsey U.S. Local Media Forecast (2013-2018)

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Continuing Shift Toward Digital Media
$105.3 $106.3 $104.5 $106.4 $104.9 $105.9
$27.9 $31.7 $36.2 $40.7 $46.6 $52.7
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
2013 2014 2015 2016 2017 2018
Traditional Online/Digital
US$Billions
2013-2018
CAGRs:
Total Media
CAGR 3.6%
Traditional Media
CAGR 0.1%
Online/Digital
Media
CAGR 13.6%
$138.0$133.2
$140.7 $147.1
$151.5 $158.6
Note: Numbers are rounded.
Source: BIA/Kelsey U.S. Local Media Forecast (2013-2018)

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© 2014 BIA/Kelsey. All Rights Reserved.
A THIRD of ALL Local Media
advertising will be Digital Media
advertising by 2018
9

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Local Ad Market with More Players than
Just Traditional Media in 2018
Newspapers Print
8.5%
Newspapers Online
2.5%
Direct Mail
24.2%
TV O-T-A
14.0%
TV Online
0.7%
Radio O-T-A
9.9%
Radio Online
0.6%
Print Yellow Pages
1.1%
Internet YP
1.8%
OOH
5.9%
Cable
4.9%
Magazine
1.0%
Magazine Online
0.3%
Online/Interactive
13.1%
Email
1.5%
Mobile
9.9%
2018 U.S. Local Media Revenues — $158.6 Billion
Source: BIA/Kelsey’s Media Ad View Plus Forecast

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What’s Going on in Local Markets?
 Media Ad View Plus
 Offers granular and
vertical view of $138 billion
local media industry
 Provides a local and a
nationwide comparative
forecast
 Allows for evaluation of
opportunities across
multiple dimensions:
 Local Ad Markets
 Media and Ad Categories
 Business Categories
Source: BIA/Kelsey’s Media Ad View Plus Forecast

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Auto
21.1%
Real Estate
40.4%
Quick Service
Restaurants
18.4%
Businesses Shifting Ad Spending
to Online
 Business categories and their percent of all spending in
online media by 2018
$730.2M
$1.4B
Source: BIA/Kelsey’s Media Ad View Plus Forecast
$3.6 B

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Retail Advertising - 2014
Cable
3.0%
Direct Mail
43.3%
Email
0.7%
IYP
0.4%
Mags Print
0.8%
Mags Online
0.1%
Mobile
1.4%
Newspaper Print
16.3%
Newspaper Online
3.2%
Online
7.4%
Out of
Home
2.7%
PYP
0.5%
Radio OTA
10.3%
Radio Online
0.5%
TV OTA
9.0%
TV Online
0.4%
U.S - $25.9 Billion
Source: BIA/Kelsey’s Media Ad View Plus Forecast

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14
National Furniture Consumers Spending
Time With Media – The Media Audit

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© 2014 BIA/Kelsey. All Rights Reserved.
Health Care Advertising:
+$500 Million by 2018
15Source: BIA/Kelsey’s Media Ad View Plus Forecast
2018
19.8%
2018
7.3%
Local Radio StationsLocal TV Stations

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Automotive Dealers Advertising
Cable TV
7.7%
Direct Mail
5.8%
Email
0.7%
Internet YP
0.7%
Magazines Print
1.0%
Magazines Online
0.2%
Mobile
1.5%
Newspaper Print
16.3%
Newspaper Online
3.2%
Online
10.2%
OOH
0.8%
Print YP
0.8% Radio OTA
11.7%
Radio Online
0.5%
Television OTA
37.4%
Television Online
1.4%
U.S. 2013 - $12.51 Billion
Source: BIA/Kelsey’s Media Ad View Plus Forecast

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© 2014 BIA/Kelsey. All Rights Reserved.
Online Advertising Automobile Dealers:
17
Classified/Verticals comprise over half of totals
2013
$2.2B
2018
$3.4B
Source: BIA/Kelsey’s Media Ad View Plus Forecast

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Automobile Dealer Advertising –
Austin, TX vs. Nationwide
Cable TV
8.4%
Direct Mail
6.4%
Email
0.8%
Internet YP
0.8%
Magazines
Print
1.0%
Magazines
Online
0.2%
Mobile
1.6%
Newspaper
Print
17.7%
Newspaper
Online
3.5%
Online
11.0%
OOH
0.8%
Print YP
0.9%
Radio OTA
11.6%
Radio Online
0.5%
Television OTA
33.4%
Television
Online
1.3%
Austin, TX 2014 - $61.4 Million
Cable TV
7.7%Direct Mail
5.8%
Email
0.7%
Internet YP
0.7%
Magazines
Print
1.0%
Magazines
Online
0.2%
Mobile
1.5%
Newspaper
Print
16.3%
Newspaper
Online
3.2%
Online
10.2%
OOH
0.8%
Print YP
0.8%
Radio OTA
11.7%
Radio Online
0.5%
Television
OTA
37.4%
Television
Online
1.4%
U.S. 2014 - $12.51 Billion
Source: BIA/Kelsey’s Media Ad View Plus Forecast

19. © 2014 BIA/Kelsey. All Rights Reserved.
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Texas New Vehicle Consumer
Spending Time With Media – The
Media Audit

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Automobile Dealers Online
Advertising - Austin, TX
Search
32.4%
Video
Display
11.2%Other
Display
4.5%
Classified
/
Verticals
52.0%
Austin, TX 2017:
$19.1 Million
Search
32.9%
Video
Display
6.5%Other
Display
7.3%
Classified/
Verticals
55.7%
Austin, TX 2013:
$12.7 Million
Source: BIA/Kelsey, 2014
Source: BIA/Kelsey’s Media Ad View Plus Forecast

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© 2014 BIA/Kelsey. All Rights Reserved.
Importance of Small to
Medium-Sized Businesses
(SMBs)
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Total Local Media Advertising:
SMB vs. Non-SMB Advertisers
.
$47.2 $49.0 $50.1 $52.6 $54.4 $57.2
$86.0
$89.0 $90.6
$94.5 $97.1
$101.4
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
2013 2014 2015 2016 2017 2018
Billions
SMB Local Ad Spend Non-SMB Local Ad Spend
34.2%
% SMB
Source: BIA/Kelsey U.S. Local Media Forecast (2013-2018)
33.0% 33.6%
36.0%
34.8% 35.4%

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Our Local Commerce Monitor (LCM)
Surveys
 SMB media usage, ROI
assessments of marketing
channels, and the use of
mobile, social and loyalty
programs.
 The longest running
survey of SMB marketing
and advertising to our
knowledge, since 1999.
 Two cuts of data: Core
Sample (All); Plus Sample
(>$25K ad spend).
Results based on 600 responses have a confidence
interval of +/- 4.0% at the 95% confidence level. The
confidence interval is larger for those questions that
were asked of just a subset of the full sample.
Source: BIA/Kelsey’s Local Commerce Monitor™ (LCM) Wave 17, Q3/2013 (and prior
waves, if relevant). Methodology: Online panels.

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Benchmark: Media Spend on Advertising
& Promotion (Declined)
Total Spend on Advertising
& Promotion Declined
Source: BIA/Kelsey’s Local Commerce Monitor™ (LCM) Waves 15-17 (Q3/2013)

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Number of Media Used Declined
Average Number of Different Media
Used for Advertising & Promotion
Biggest Losers
(in SMB usage):
 Directories
 Cable TV
 Newspapers
 Outdoor
Source: BIA/Kelsey’s Local Commerce Monitor™ (LCM) Waves 15-17 (Q3/2013) and prior waves, if relevant.
Methodology: Online panels.

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Online Footprint
Percentage of SMBs Using Each Channel
Source: BIA/Kelsey’s Local Commerce Monitor™(LCM) Wave 17, Q3/2013 (and prior waves, if relevant).
Methodology: Online panels.

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Mobile: On a Roll
(More Mobile Advertising)
Used Mobile A Year Ago
(Wave 16 Q3/2012)
Using Mobile Now
(Wave 17 Q3/2013)
Increase in use by Plus Spenders: 40% (Wave 16) to 53% (Wave 17).
Source: BIA/Kelsey’s Local Commerce Monitor™(LCM) Wave 17, Q3/2012 and Wave 16 (and prior waves, if relevant). Methodology: Online panels.

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© 2014 BIA/Kelsey. All Rights Reserved.
Radio Advertisers
28

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Distribution of Spending by Radio Advertisers
– Small & Medium-Sized Businesses
Online
25.4%
Radio
12.5%
Mobile
8.0%
Sponsorships/
Giveaways
7.1%
Deals &
Coupons
6.5%
PYP
6.2%
Newspapers
5.5%
Direct Mail
5.2%
Email Mktg.
5.1%
TV
4.9%
Cable
3.4%
Other
10.2%
26 additional categories of
advertising and marketing
spent by radio advertisers
Source: BIA/Kelsey’s Local Commerce Monitor™(LCM) Wave 17, Q3/2013 (and prior waves, if relevant).
Methodology: Online panels.

30. © 2014 BIA/Kelsey. All Rights Reserved.
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Digital Media Used For Advertising &
Promotion By Radio Advertisers
26.4%
29.6%
32.0%
34.4%
36.0%
36.0%
36.8%
44.8%
52.0%
71.2%
0% 20% 40% 60% 80%
Online Coupons
LinkedIn
IYP
Facebook Ad
Twitter
Google
Video You Tube
Video Website
Email Mktg.
Facebook Page
Source: BIA/Kelsey’s Local Commerce Monitor™ (LCM) Wave 17, Q3/2013 (and prior waves, if relevant).
Methodology: Online panels.

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© 2014 BIA/Kelsey. All Rights Reserved.
32.9%
Percentage of Advertising Budget for
Digital / Online for next 12 months
31

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© 2014 BIA/Kelsey. All Rights Reserved.
Cross-Platform Selling
32

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Your Customers’ Needs Are Changing

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© 2014 BIA/Kelsey. All Rights Reserved.
Digital Agency
34

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Hello, I’m from [your company], and I’m here to help
your business. And so are 38 of your closest friends.
Solution to Help You Grow Your Business! We Provide It!
Search/SEM/SEO X
Display X
Email marketing X
Social marketing X
Video marketing X
Electronic Presence/Reputation Management X
SMS Text/Mobile Apps X
Contests/Games X
Loyalty X
Coupons X
Website hosting/responsive design X
Etc., etc., etc. X

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Optimizing Sales
 Mandatory Companywide Certification and Training
 Some media companies require that all sales reps become Google AdWords
certified
 Some often hires non-ads salespeople who are experienced in “truly
consultative” business sales
 Compensation & incentives for digital sales
 Rules of Thumb:
 4 legged calls for major accounts ($1500+/month)
 Long tail = single rep/telesales/self-serve
 Digital vs. Hybrid sales team debate continues
 Verticals Focus:
 High-value leads + Bigger budgets = Better margins
 Auto, Medical, Education, Financial Services, Real Estate
 Long-tail SMB approaches are less proven & difficult to scale

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Fulfillment: We Recommend Partnering
 Key Questions for Partner Vetting
 What Is Their Time-to-Market?
 Can They Scale Fulfillment as You Scale Sales?
 How do they inform, train & empower your sales
teams?
 What’s the Cost Structure? Your Margins?
 Why Outsource?
 Not Your Core Competency
 Expedite Time-to-Market
 Let Your Sales Team Focus On…SELLING

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38
Many Partner Choices
(Some are more specialized than others)

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39
Examples of Media Companies
Successfully Cross-Selling

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© 2014 BIA/Kelsey. All Rights Reserved.
Consumer Use of Mobile Devices:
Opportunities?
40

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Monthly Time of Viewing Spent by Medium –
Users 2+, 1st Quarter
0
20
40
60
80
100
120
140
160
2010 2011 2012 2013
Hours
Live TV Timeshifted TV Internet Video Mobile Video
Source: Nielsen, The Cross-Platform Report. 2011-2013
84.1% of all
viewing

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42
Monthly Time Spent of Viewing by Medium –
Users 2+, 1st Quarter
9.5
10.8
12.2
13.4
4.2 4.6
5.4
8.3
4.3
4.8 5.0
5.5
0
2
4
6
8
10
12
14
16
2010 2011 2012 2013
Hours
Timeshifted TV Internet Video Mobile Video
2010-2013:
40.3% Increase
2010-2013:
26.5% Increase
Source: Nielsen, The Cross-Platform Report, 2011-2013
2010-2013:
97.6% Increase

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43
Sources of News:
Where People Got News Yesterday
Large decreases
in news sources for
traditional media

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44
Daily and Regular News Consumption
Local TV news
saw nearly 30%
drop in daily news
consumption
Source: Pew Research Center, Trends in News Consumption: 1991-2012

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45
© 2014 BIA/Kelsey. All Rights Reserved.
More Usage of News Websites or Apps:
Respondents using a
smartphone/tablet to consume
digital content with news
website or app:
Source: Donald W. Reynolds Journalism Institute, University of Missouri, July 22, 2013 45
2012
62%
2013
70%

46. © 2014 BIA/Kelsey. All Rights Reserved.
46
Texas TV & Radio Integrating Over-the-Air
Content with Online & Mobile
KLBJ
KASE
KVUE-TV
Radio Television
KXAN-TV

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47
© 2014 BIA/Kelsey. All Rights Reserved.
Conclusions
47

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48
© 2014 BIA/Kelsey. All Rights Reserved.
Texas radio and television stations
find themselves in an
incredibly competitive and
changing marketplace
48

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49
© 2014 BIA/Kelsey. All Rights Reserved.
In the local advertising marketplace,
Radio and television stations
are “holding their own”
49

50. © 2014 BIA/Kelsey. All Rights Reserved.
50
© 2014 BIA/Kelsey. All Rights Reserved.
YET viewers and advertisers
have more cross-platform
opportunities to consider
50

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51
© 2014 BIA/Kelsey. All Rights Reserved.
Broadcasters must use their
strengths to pivot and take
advantage of opportunities:
Local Sales Force:
Boots on Ground
51
Local Image Local Info and
Programming

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52
© 2014 BIA/Kelsey. All Rights Reserved.
BIA/Kelsey Helps Clients Succeed Every
Step of the Way
UNDERSTAND
marketplace
dynamics
IDENTIFY &
MANAGE the
competition
BASE
DECISIONS
on reliable,
actionable
market data
& insights
ALIGN
PRODUCTS &
RESOURCES
to drive
operations
MAKE
INVESTMENTS
in growth
opportunities
52

53. The Local Media &Advertising Experts
© 2014 BIA/Kelsey. All Rights Reserved.
This published material is for internal client use only. It may not be duplicated or distributed in any manner not permitted by contract. Any unauthorized distribution could
result in termination of the client relationship, fines and other civil or criminal penalties under federal law. BIA/Kelsey disclaims all warranties regarding the accuracy of the
information herein and similarly disclaims any liability for direct, indirect or consequential damages that may result from the use or interpretation of this information.
Questions & Comments:
Mark R. Fratrik, Ph.D.
Sr. Vice President, Chief Economist
(703) 802-2982
mfratrik@biakelsey.com