On-demand TV service is vehicle for assault on the print media�s traditional classified strangleholdBy Peter John Meiklem, Media Correspondent
The long-awaited digital strategy from Scotland's largest commercial broadcaster, praised by media analysts for its showcase new website, is set to boost profits with a first foray into classified advertising via strengthened local content.
In a presentation to shareholders and major investors last week, SMG's head of digital Alistair Brown, alongside chief executive Rob Woodward, outlined the broadcaster's plans to launch an iPlayer-style, on-demand television service later this summer. For the first time, the broadcaster will make an aggressive bid for classified advertising revenue online, traditionally the preserve of newspaper publishing groups.
The new site, to be found at stv.tv, will offer viewers a mix of ITV shows and exclusive Scottish content, such as news bulletin Scotland Today and classic shows from the STV archive including Dr Finlay's Casebook, Weir's Way and soap Take The High Road. It has been developed in partnership with website technology firm Brightcove and will also include text news sourced from wire copy and in-house writers.
Brown said: "The iPlayer is a huge undertaking, and I'm a big user, but I believe we have produced something that stands up against it. We SMG are no BBC, but in terms of quality it stands up."
According to the broadcaster, stv.tv currently attracts only 8000 unique users every day. In 18 months the company expects that figure to be 30,000, growing to 200,000 per day using the revamped site by 2010.
Currently SMG, like other media players, generates a negligible amount of revenue from online advertising. In 18 months the company hopes to grow that revenue to £1 million, growing to £2.5m in 2010. By 2010, the company hopes to have snatched 3% of Scotland's classified advertising market.
Brown, who was appointed five months ago to head up SMG's online strategy, said the new site would also include "city tv", meaning news and entertainment content specifically targeted at an ultra-local audience.
The move is a bid to attract the classified advertising revenue, famously described by News International proprietor Rupert Murdoch as the "rivers of gold" upon which newspapers are based.
SMG has worked in this area before, creating S1homes and S1jobs, two of the most popular online classified sites, but sold the business to Herald publisher Newsquest in 2003.
The new bid for classified advertising - illustrated by SMG at last week's meeting with a map of Scotland showing all the nation's newspaper and radio brands with the slogan "stv is the dominant force in the Scottish media" - highlights the issues created be growing media convergence.
Previously, broadcasters, newspapers and radio stations have not been direct competitors, but the continued migration of advertising spend on to the internet has brought Scottish companies increasingly into the same media space. Although digital advertising revenues are currently low, they are expected to grow quickly at the expense of old media.
Woodward played down the competitive strand of his company's new plans, claiming "there is room for everyone at the table", but with a downturn in advertising spend continuing, the battle for online dominance is key, a fact admitted privately by key media players across Scotland.
Woodward said: "We are not trying to be aggressive, and we are looking at co-existing with other media companies. We are aware there will be more newcomers into this market as well."
Jonathan Barrett, a media business analyst with bank Kaupthing, said he was reasonably impressed by what he saw at last week's meeting.
He said: "The site is very smart. It is clearly the most important element of the big plan the changes made by chief executive Rob Woodward when he took over the company more than a year ago, so it is crucial they get this right."
He said the company's ambitions in the classified market were "modest" considering the strength of the STV brand. "They are attacking the print market. I feel they can do big chunks of what they are promising to do with the site, but there are other parts that I'm not so sure about. They have little experience in attracting classified advertising, for instance."
Headed by Brown, SMG's digital team is built around experience developing similar online efforts for other Scottish media brands, in particular for Scotsman publisher Johnston Press.
Brown was a key figure in the creation of Scotsman.com and arts magazine The List's online effort, and several members of his team share a similar pedigree. Head of news Will Springer worked on Scotsman.com while arts and sport editor Robert Dawson Scott is former arts editor of the Edinburgh paper. New head of product Kevin Hall has also left Johnston Press for SMG.
The digital plans were announced at the same as the company proposed to change its name from SMG to stv Group plc, to reflect the greater emphasis the company now puts on making programmes. The move follows the sale of Virgin Radio for £53.2m to Times of India owner TIML last month.
