By Rick Ducey and Steve Passwaiter

LIN TV Corporation (TVL/NYSE) is a public company with 27 television stations in 17 markets, reaching about 11.5 million households each week. This makes LIN one of the largest television group owners in the country. LIN’s stations typically rank first or second in the Nielsen ratings, both overall and in their news time slots. In addition to its owned and operated television properties, LIN has a growing digital business, more than 50 television station and niche web sites, as well as mobile offerings, including two very popular iPhone and BlackBerry applications recently released. We spoke with LIN’s President/CEO Vince Sadusky to get his thoughts about the firm’s adaptive digital strategy and what he believes are growth platforms for LIN going forward.

BIA/Kelsey: Vince, you just purchased Red McCombs Media, an online media and services company. How does this fit in with your television stations, web sites and mobile initiatives?

Vince Sadusky: It’s kind of funny; we weren’t actively looking to buy. We just saw a good opportunity in RM Media to bring in some excellent sales and marketing expertise to help us get where we want to go. We’ve had a partnership with them and found it to be incredibly helpful. Plus, they have an outstanding customer service culture that we really liked. This fits very nicely with our strategic plan. And you know, the company had a fair amount of revenue on a standalone basis with positive cash flow!
Generally, we hold ourselves out there as folks willing to do partnerships and deals. I make regular trips to the West Coast to keep the discussions going. We’re open and interested in talking. I have to say that sometimes we’re dealing with young folks and new companies that don’t know what “on air” means but they do understand audience reach so that’s a part of the television business that’s impressive to them.

BIA/Kelsey: Tell us more about your strategic plan?

Vince Sadusky:Well, we had a new management team come on board a couple of years ago. We really wanted to reshape LIN TV into a digital media company. Our goals were to grow and diversify our revenue base; become a significant player in the digital media market; develop a national footprint and get into the performance-based marketing game. We focused initially on our web properties and grew that revenue contribution from 1-2% to 12% of overall revenues by the second quarter of this year. We sold the value of the web sites independently of our television properties to maximize value and revenues. We found that advertisers were willing to pay premiums for our station branded web sites but didn’t want to put all their digital money into just one web site. So that was fine and it provided good growth, and will continue to, but would also limit our future revenue growth potential.

The second issue was coverage for national online advertisers. While we’re in 17 markets with our stations, that’s only 9% of the country. This actually limits our attractiveness to national advertisers. No matter how good one of our television stations web sites are, at the end of the day, it’s only one market. Unlike our TV stations, our web sites can go national with their geography. However, the only significant access we had to the national ad market was through ad networks. Our experience is that ad networks make for an unstructured platform that we can’t really control. For example, we’re news leaders in our market and that reputation is important to us. With Google’s contextual advertising, there was a story about a woman’s murder and her husband was the prime suspect. The story identified him as a dentist and Google served up a dentist ad in the right column. We’ve also had FOX ads appear on our CBS station’s site. In the television business we’ve got procedures to prevent this kind of thing.

To get more control over context and presentation of content and get access to significant growth we targeted national spending. Clearly, we felt we needed to go outside the ad networks to get there in a way that we could be comfortable with the environments we were creating and the value we were receiving.
That’s when we started working with RM Media and had a terrific outcome. We very much enjoyed their creative minds, execution and experience. Their backend solution was great for verifying ad campaigns and really opened up the “black box” to clients. They could follow campaign performance on a daily basis and loved it. RMM offered money back performance guarantees based on click-through rates or some other relevant metrics. RM Media can target by demo, geography, context, behavior or psychographics. And they continually monitor CPM, CPC and CPA metrics so campaigns are effectively tracked and fine-tuned to achieve campaign and ROI goals.

BIA/Kelsey: Your acquisition of RM Media clearly supports your goal to develop a national footprint and have more control over your digital inventory. How about in your local markets, any benefits there from this acquisition?

Vince Sadusky: Definitely! Say for example you’re selling a local car dealership or a fast food franchise for their specific geographies down to zip codes. We could always provide banners and video pre-rolls but now with RM Media we can provide an ad network catering to their demos and provide a full, interactive ad campaign with ROI accountability built-in.

There are local advertisers we couldn’t touch with our television stations. For example, in Providence, Rhode Island there may be a local sporting goods store guy who sells to the junior high and high school teams. He can’t afford TV but he can afford a geo-targeted digital campaign. We give him video pre-roll and he looks like a pro and loves it. We can do a whole interactive ad campaign for him based on IP addresses in his part of the market. This kind of robust and accountable ad campaign is a terrific thing for local advertisers. They can play with the big boys now. This takes a lot of time on our part to provide the education to these small businesses but it’s a significant growth area for us.

BIA/Kelsey: Well, let’s talk about that education effort and generally your approach to sales, sales training and sales management. There are a lot of approaches being championed? What’s your secret sauce?

Vince Sadusky: We have a two-pronged approach to sales. Our history is in the television business and that requires a certain skill set for a successful sales person. It’s different with digital media. We trained our existing folks as best we could to transition into digital media as well as television. It worked in some cases but not in others. We have great sales people on the television side and we didn’t want to lose them. So we set them up to succeed where they’re strong instead of trying to force fit them into digital media sales. It doesn’t make sense to try to have everyone selling everything.

The thing is that with performance sales it’s a whole different language than it is selling ratings. It requires accountability value propositions, metrics and guarantees that just aren’t first nature to our traditional sales teams. We’ve hired interactive sellers who are really pros. We will have the traditional AEs partner with the interactive AEs where it makes sense. The on-air sales team often makes introductions for our digital sales team and that works well. The television salespeople feel comfortable talking about numbers and video pre-rolls with their existing books of business. To develop new business on the digital side, it’s all about the interactive AEs doing what they do best.

BIA/Kelsey: You’ve talked about the value but also the limits of web sites branded around your television stations. How do you grow outside that branding, do you have vertical web site strategy?

Vince Sadusky: We haven’t been interested in purchasing sites. I’ll tell you why. We’ve seen lots of traditional media investment go into verticals. Here pricing and valuation is based on traffic, not profitability. At LIN, we’re keeping our eye on the bottom line and we’re not sure what these vertical web sites are worth in terms of profitability. We know we can get some great content to our web sites where business models such as revenue sharing and syndication are in play and we’re comfortable there. We have developed vertical sites where we think it makes sense. We’ve got micro sites around some of our shows. In Green Bay, Wisconsin one of our local shows, “Living With Amy” at 10am generated so much traffic, we split her off into a separate site. We haven’t tried to do this on a larger basis with national content though.

BIA/Kelsey: Speaking of content, how does user generated content and social media fit into your plans?

Vince Sadusky: What we do really well is deliver professionally-produced news and entertainment. Our focus is to extend how people can consume this content across platforms. We don’t want to do just a couple of newscasts. We want to offer that content across platforms – on-air, mobile and web. We do need to be smarter on the interactive side. We look at social media and see the buzz but wonder how effective it really is for advertising. We’re not necessarily interested in being the first in or even early followers, we look for sustainable, profitable business models. We’re still new to the digital game, we are still figuring out what works.

We have released iPhone and Blackberry mobile applications that have been enormously popular. Our Mobile, Alabama television station released an iPhone app that was one of the top 10 iPhone apps! We view mobile as about the state of advancement of the web five years ago. It’s early days from an advertising business perspective. People do love their cell phones and they’re in the game for the latest and greatest upgrades and smart phones. We also know that people value their local news and weather. We want to be there for them.

BIA/Kelsey: There’s a lot of energy around television suddenly discussing it’s a wireless medium that can offer mobile video on cell phones. Is this an important growth area to LIN?

Vince Sadusky: We view mobile video like we do Web 2.0. We got started behind the 8-ball on the web side. But now, we’re in the video game. That is what we do. So we’re much better off in the mobile video game from day one. We have good, relevant content. People can get their national information, shopping and so on from a variety of sources. But for substance and relevance, they’ll want their local news. That goes to our strength in story telling with television using moving pictures, sound and our narrative power. We are cautious about the ad load with mobile. We don’t want to turn people off. We need to figure out the right balance.

BIA/Kelsey: Any final words, Vince?

Vince Sadusky: Well, like I say, we know what our strengths are and we also know where we have to learn. We set some new goals for ourselves in building out a digital media business while leveraging our strengths in local television. It’s working but we still have a lot to figure out.

BIA Commentary:
First off, we want to thank Vince for taking the time to talk with us. We saw the item on the RM acquisition and thought it an interesting move particularly since investment capital is rather short these days.
The acquisition of RM makes LIN a more effective interactive player as they now have a full service digital agency behind them. Further, the ability to come to the realization that just being able to offer one local website (your own) to advertisers might not be enough to coordinate a successful digital ad effort is a big moment for a historic TV company. TV operators have never ever worried about not being able to offer enough reach. The acquisition of RM and the ad network it has under contract gives LIN’s digital sales teams the ability to look more like problem solvers to local businesses who are struggling to understand how to successfully implement digital media into their existing ad spending. LIN now offers solutions not exclusively tied to their own properties. We believe this is a good space to occupy and helps position LIN as a solution provider that is agnostic to any one specific solution. As broadcast companies take on more platforms, we believe this “ad agency” mentality is a philosophy that is destined to work for local media sellers.

Tags: contextual advertising, digital strategy, LIN, online media, performance-based marketing, Red McCombs Media, Vince Sadusky

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