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1 Sponsors & Partners 1

2 Today s Agenda & Discussants Welcome! 2019 challenges Highlights from BIA s recent nationwide advertising forecast Examination of ad spend changes around traditional media and online/mobile platforms Estimates for mobile and social ad spend How can traditional media players compete in the growing marketplace: Guest Speaker: Jon Silverman Five predictions for 2019 Questions and Conclusions Mark Fratrik SVP & Chief Economist BIA Advisory Services Jon Silverman Expert Industry Adviser, BIA Advisory Services 2

3 Opportunities & Challenges in 2019 and Beyond H E A D W I N D S Digital Leakage: GroupM s alert, Google, Facebook, OTT siphon TV $ Political/Olympic: Loss of spending Brands: Cutting back on local media agencies, shifting spend to national platforms, reducing ad spend in traditional media Consumers: Continued shift in viewing patterns Media Agencies: Complicated and lengthy workflow for local TV, headcount reductions, multiple systems needed to plan, buy, activate, evaluate Tariff Impacts: Auto, CPG, Retail Social Platforms: Facebook limits upside for local TV T A I L W I N D S Attribution: More solutions in the market for local TV to show its efficacy OTT: New subscriber and ad revenue streams Digital: Premium inventory, native ads, transparency and fraud-free Addressability: Smart TV and connected devices provide audience data Metrics: Progress in developing cross-platform video currency metrics Mobile: High growth channel creates new opportunities for local TV Premium Video: Local TV delivers most attractive programming, still owns lion s share of video audience, news leaders

4 Success in 2019 will require you to: Properly size the local ad market. Identify the split between traditional and online advertising. Build market-by-market forecasts that prioritize against local verticals and revenue opportunities Deliver tactical market assessments to your local sales teams Arm local Sales leaders with data and With insights BIA ADVantage you can be an Informed Marketing Consultant and a Trusted Advisor to your clients

5 Think Broadly: Local Market May Be Larger than Expected Growth Rate Direct Mail % TV % Radio % Out of Home % Newspapers % Cable % Directories % Magazines % Traditional Media 2, , % Mobile % Online % % News Online % Radio Online % Internet YP % TV Online % Magazines Online % Online Media 1, , % Total Ad Revenue 3, , % BIA Take TV gets just 12% to 18% of local advertising in most markets.

6 Orient Around Ad Spend by Vertical in Your Market 2019/2018 % of Total Growth Advertising Rate Retail Advertising 739, , % 4.5% Financial/Insurance Advertising 453, , % 6.5% General Services Advertising 445, , % 5.5% Automotive Advertising 442, , % 5.5% Restaurants Advertising 421, , % 7.5% Technology Advertising 387, , % 8.0% BIA Take 6 key verticals account for 70% to 80% in most markets. Leisure/Recreation Advertising 309, , % 7.0% Health Advertising 265, , % 5.0% Media Advertising 114, , % 5.0% Real Estate Advertising 93,317 99, % 7.0% Other Advertising 60,637 50, % -17.4% Education Advertising 47,210 49, % 5.0% Gov't/Pol/Rel'g Advertising 96,737 25, % -73.8% $3,877,661 4,021, %

7 Set Realistic Targets for Online Advertising Google Facebook Bing Yahoo Yelp Pandora AOL Twitter Reach Local National Online % % News Online Radio Online Internet YP TV Online Magazines Online Other Online Local Online BIA Take 60%-plus of local online advertising goes to outside competitor.

8 Forward Looking Prediction 11/15/2018 By 2023, BIA estimates the total local advertising market will grow to $160.8 billion. Online and mobile will continue to increase their shares in the market, while categories like print newspapers and magazines will decrease.

9 Traditional Media Maintains Noticeable Share Local Ad Market 2019 Online/Interactive 14% Television OTA 11.8% Radio OTA 8.9% Cable 4.0% Television Online.9% Radio Online 1.1% *Radio online revenue include online revenue from terrestrial and online streaming services. Note: Numbers are rounded.

10 Traditional Media Decline Is Not Uniform Traditional print media continues to see decreases in total revenue and larger decreases in share, while other traditional media see slight increases in total revenue and only smaller decreases in share. Online/digital s share of local advertising continues to increase substantially BIA Advisory 2017 BIA/Kelsey. Services. All Rights Reserved. 10

11 Local Online/Mobile Cutting Deeply Into Print Local Advertising Share in 2019 and % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Print Media Other Media Online/Mobile 35.8% 43.8% 30.6% 28.3% 33.5% 27.9% Note: Numbers are rounded. Print Media includes local newspapers, local magazines, direct mail, and print yellow pages. Other Media includes local over-the-air television, local cable systems, out-of-home, and local radio. Online/Digital includes all forms of online desktop and mobile ad spending.

12 Smaller Shares for Some Traditional Media Local Ad Market 2023 Online/Interactive 17.5% Television OTA 10.9% Radio OTA 7.8% Cable 3.6% Television Online 1.3% Radio Online 1.3% *Radio online revenue include online revenue from terrestrial and online streaming services. Note: Numbers are rounded.

13 Mobile Advertising Mobile will represent 12.3% of local advertising spend in 2019 and will grow to 14.7% by BIA Advisory 2017 BIA/Kelsey. Services. All Rights Reserved. 13

14 Social media advertising revenue by 2023 will be almost 50% higher than 2018 levels. Social Media 2018 BIA Advisory 2017 BIA/Kelsey. Services. All Rights Reserved. 14

15 Location-Targeted Mobile Ad Spend Includes $3.7 billion of additional mobile advertising sold by traditional media players, including TV/Radio broadcasters and Newspaper/Magazine publishers.

16 Social Media Advertising Definition Social media advertising is defined as money spent on advertising formats across social networks. Social advertising is included in BIA s display revenue forecast, which falls within the online/interactive and mobile advertising categories. BIA s definition of social advertising does not include revenue derived from the following: Virtual currency Social marketing/measurement platforms and services Social commerce

17 U.S. Total Social Media Advertising

18 Let s dive into more data and analysis with our local intelligence platform BIA ADVantage 2018 BIA Advisory BIA/Kelsey. Services. All Rights Reserved. 18

19 Takeaways: Keys to Growth 1. If you know the size of the local advertising opportunity in your market, you can accurately assess your station s OTA and online revenue performance. Comparing your station s revenue performance to the other stations means that you are not considering 85% or more of the local advertising opportunity in your market. 2. If you know the size and competition for advertising for different business categories, you can properly allocate your resources. Business categories in 6 verticals account for 70% to 80% of the local advertising in most markets. 3. If you know that direct mail gets the largest share of local advertising in your market, you can develop campaigns to take share away from them. In some business categories, direct mail accounts for over 40% of the local advertising spend. 4. If you know how much local advertising is being generated by online/digital/mobile platforms, you can accurately assess your station s online/digital performance. Online/digital advertising accounts for 30% to 35% of local advertising in most markets and mobile advertising is the most rapidly growing media. 5. If you know how much of local online/digital advertising is going to nationwide providers targeting your local market, you can set a realistic budget. In most markets, Google, Facebook, etc. take out 60% or more of the local online/digital advertising.

20 Jon Silverman Traditional Media Successfully Selling Online/Mobile Platforms

21 You ve seen the forecast. Now - how to activate upon it? Step 1 Step 2 Identify the channels where your audience s eyes are, where advertisers are spending, and where you are currently making revenues. Do they all make sense given what you ve seen from the Forecast? Where there are gaps, begin to implement education, training, and product streamlining so that you can create expert sellers. No matter what product your organization brings onboard to solve for digital, social, or other new media challenges, your team needs to be ready to engage and solve problems. Step 3 Experts like BIA can help your team sell traditional and core products seamlessly with highvolume, and in-demand digital products. Using Research specific to local markets and advertisers Evaluate your current landscape, including margins, volume, demand, etc. Training and webinars catered to your organization In-Market help; speaking engagements, sales call support

22 FIVE Predictions for 2019 Overall economy will continue to grow strongly even with higher interest rates, PROVIDED NO a major trade war Local television - off its high with incredibly strong political advertising - will see noticeable decreases in total advertising, with some markets seeing decreases in the 30-50% range. Local cable systems, while still being able to geotarget consumers, will continue to see erosion in their subscriber levels, with a negative impact on local advertising revenue Social media advertising, even with all of the controversies surrounding privacy, will still see double digit increases given the remarkable ability to target consumers. Mobile advertising continues to grow, with traditional media players increasing their ability to sell that advertising platform EXTRA!! The Washington National baseball team will win the World Series with or without Bryce Harper

23 BIA ADVantage INFORM TARGET ADVISE - Track paid media spending to target local audiences. National Economic Overview - Drive strategic thinking as it relates to - Estimate shares by vertical to identify potential revenue. - Compare your media to other inmarket media and identify where ad spend can be expanded. - Identify verticals to increase share of wallet. digital. - Isolate revenue generation activities to stay competitive. - Use forecast and advertiser survey data to prepare sales plans. - Explain advertising opportunities to customers. - Become trusted, expert advisor to your advertising clients BIA/Kelsey. All Rights Reserved.

24 Upcoming Nov. 28: Sales Enablement: Recruitment, Technology Implementation & Coaching On Demand Voice Search and Advertiser Intentions in 2019 (Hosted Nov. 12) Local as a Service (Laas): Brands Going Local (Hosted Nov. 14) 24

25 Thank You to our Sponsors & Partners Focused on Local Impact Global Location Technology Localized Programmatic Advertising Data Solutions for Sales Leadership, Management, Sales and Marketing Austin-based trade association representing the interests of Texas' free, over-the-air radio and television stations. 25

26 Explaining Local Questions & Comments: Mark R. Fratrik, Ph.D. SVP, Chief Economist BIA/Kelsey BIA/Kelsey. All Rights Reserved BIA Advisory Services, LLC. 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 This or published criminal penalties material under is for federal internal law. client BIA/Kelsey use only. disclaims It may all warranties not be duplicated regarding or the distributed accuracy of in the any information manner herein not permitted and similarly by contract. disclaims any Any liability unauthorized for direct, distribution indirect or consequential could result damages in termination that may of result from the use or interpretation of this information. 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.