|
To gauge the state of the local cable TV advertising business, Multichannel News conducted an online survey of sales executives last month. The survey highlights the industry’s thoughts about the overall ad sales climate and the performance of various sectors. (To read MCN's LAS cover story, click here.)
Cable Advertising Revenue
Executives predict a tough sales climate, with nearly half (48%) estimating revenue declines in 2008 and one third seeing declines next year.
(Percent) |
2008 |
2009 |
Decline in revenue |
48 |
33 |
No change in revenue |
7 |
18 |
Revenue increase by 1-5% |
25 |
26 |
Revenue increase by 6-10% |
10 |
14 |
Revenue increase by 11-15% |
5 |
6 |
Revenue increase by more than 15% |
6 |
4% |
Respondents were asked “For the sales that you’re responsible for, how much revenue growth do you expect in 2008 (versus 2007)?” and “How much revenue growth do you expect in 2009 (versus 2008)?” |
Biggest Challenges Facing Cable Ad Business
Economic conditions top the list of factors hurting the ad sales business.
(Percent ranking each item as No. 1 or No. 2 biggest challenge) |
2008 Survey |
2007 Survey |
2006 Survey |
Local or regional economic conditions |
81 |
67 |
50 |
National economic conditions |
62 |
36 |
26 |
Competition from local TV stations |
23 |
25 |
25 |
Online competition |
11 |
11 |
15 |
Need to sell more channels more aggressively |
9 |
19 |
30 |
Competition from local radio stations |
6 |
7 |
17 |
Need for a larger sales team |
2 |
12 |
13 |
Wireless competition |
2 |
9 |
16 |
Other |
5 |
14 |
8 |
Respondents were asked, “Please rank the top three greatest challenges your sales staff faces in growing its profit margins. Rank from 1 to 3 where 1 is the most challenging.” Survey respondents in 2007 and 2006 were asked a similar question. |
Internet Ad Sales
Cable systems are increasingly selling their Web sites.
(Percent of companies that sell ads on their Internet sites) |
2008 |
2007 |
2006 |
Yes |
66% |
56% |
51% |
No |
34 |
44 |
49 |
Respondents were asked: “Does your company have a specific Web site designed to generate ad revenue?” |
2009 Ad Revenue Trends by Sector
Nearly two thirds (65%) of respondents predict further declines in revenue from the auto sector.
(Percent) |
Increase |
Stay the Same |
Decrease |
Medicines & Proprietary Remedies |
48% |
38% |
14% |
Telecommunications |
40 |
45 |
15 |
Financial |
34 |
21 |
45 |
Insurance & Real Estate |
27 |
30 |
43 |
Retail |
23 |
25 |
52 |
Beverages |
23 |
47 |
30 |
Restaurants |
22 |
43 |
35 |
Media & Advertising |
18 |
47 |
35 |
Automotive |
16 |
19 |
65 |
Government and Politicians |
5 |
19 |
76 |
Respondents were asked, “Do you expect your company’s revenue to increase, decrease, or stay the same in each of the following industry sectors for 2009?” |
Biggest Revenue Generators
Despite the sector’s troubles, 41% of those surveyed expect automotive to remain their top money maker in 2009.
(Percent) |
2009 |
2008 |
2007 |
Automotive |
41% |
40% |
48% |
Medicines & Proprietary Remedies |
22 |
4 |
6 |
Telecommunications |
13 |
18 |
27 |
Media & Advertising |
10 |
5 |
7 |
Restaurants |
5 |
4 |
2 |
Financial |
4 |
- |
- |
Retail |
2 |
4 |
5 |
Government and Politicians |
1 |
21 |
3 |
Beverages |
1 |
- |
1 |
Insurance & Real Estate |
0 |
5 |
1 |
Respondents were asked, “Which one industry sector do you expect to be the strongest revenue generator for your company in 2009? (Check only one.)” 2008 and 2007 data were from similar questions asked in the 2007 and 2006 online surveys.
SOURCE: Multichannel News survey |
MSO Advertising Revenue
($ in millions) |
First Nine Months 2008 |
First Nine Months 2007 |
Percent Change |
Comcast |
1,117 |
1,149 |
-2.8% |
Time Warner Cable |
654 |
636 |
+2.8% |
Charter |
223 |
216 |
+3.2% |
Mediacom |
47.6 |
48.6 |
-1.9% |
Insight |
30.9 |
32.1 |
-3.7% |
Total |
2,041.6 |
2,081.7 |
-1.9% |
SOURCE: Company reports |
Insertable channels
Operators continue to insert ads on more channels, with an average of 53 in 2008.
(Percent) |
2008 Survey |
2007 Survey |
2006 Survey |
Less than 10 |
9% |
12% |
10% |
10 – 29 |
7 |
20 |
25 |
30 – 49 |
51 |
45 |
45 |
50 and over |
33 |
23 |
20 |
Average # of insertable channels: |
53 |
45 |
35 |
Respondents were asked, “How many insertable channels do you currently have?” Data for 2007 and 2006 is from the 2007 and 2006 surveys.
SOURCE: Multichannel News survey |
The Battle for Market Share
Executives see both the Internet and local cable gaining market share in 2009.
(Percent of respondents predicting a sector to gain or lose market share) |
Gain |
No Change |
Lose |
Internet |
82% |
15% |
3% |
Local cable |
56 |
22 |
22 |
Wireless |
55 |
37 |
8 |
Cable interconnect |
35 |
40 |
25 |
Outdoor |
15 |
56 |
29 |
Local broadcast TV |
12 |
33 |
55 |
Radio |
8 |
32 |
60 |
Newspapers |
3 |
17 |
80 |
Respondents were asked, “Do you expect each of the following sectors to gain or lose share in your local market for 2009? Please check gain, no change or loss for each sector.” |
Investing In the Sales Staff
Nearly half (47%) plan to invest in additional training for their sales staff in 2009. |
(Percent) |
Training of sales staff |
47% |
Promotions (campaigns and/or materials) |
40 |
Upgrade of hardware/software for sales automation |
39 |
Research |
32 |
Upgrade of hardware/software to enhance ad targeting |
30 |
Back-office personnel |
13 |
(Respondents were asked, “In which of the following areas do you expect your company to increase resources for you and your staff in 2009? Check all that apply.”) |
Interconnect Advertising Revenue
Executives were pessimistic about interconnects, with over half (55%) predicting declining or flat revenue in 2009.
(Percent) |
2008 |
2009 |
Decline in revenue |
44% |
35% |
No change in revenue |
10 |
20 |
Revenue increase by 1-5% |
23 |
30 |
Revenue increase by 6-10% |
12 |
4 |
Revenue increase by 11-15% |
2 |
6 |
Revenue increase by more than 15% |
10 |
5 |
(Respondents were asked “If you’re involved with interconnect sales, what percentage growth do you expect in 2008 (versus 2007)?” and “If you’re involved with interconnect sales, what percentage growth do you expect in 2009 (versus 2008)?”) |
National Cable Spot Sales
Of those surveyed, 71% believe national spot business will be down or flat in 2009.
(Percent) |
2008 |
2009 |
Decline in revenue |
43% |
45% |
No change in revenue |
11 |
26 |
Revenue increase by 1-5% |
20 |
16 |
Revenue increase by 6-10% |
10 |
3 |
Revenue increase by 11-15% |
7 |
6 |
Revenue increase by more than 15% |
10 |
3 |
(Respondents were asked “If you’re involved with national spot sales, what percentage growth do you expect in 2008 (versus 2007)?” and “If you’re involved with national spot sales, what percentage growth do you expect in 2009 (versus 2008)?) |
Advanced Advertising Platforms
Most (73%) respondents say advanced advertising platforms are “very important” or “important” in their overall sales efforts.
(Percent) |
2008 Survey |
2007 Survey |
2006 Survey |
Very important |
37 |
38 |
41 |
Important |
36 |
38 |
41 |
Not very important |
19 |
13 |
10 |
No importance |
2 |
3 |
2 |
Of no importance now, but expect it will be in the near future |
6 |
8 |
6 |
Respondents were asked, “How important is emerging media — interactive, VOD and hyper targeting — in your negotiations?” 2007 and 2006 data is from earlier online surveys. |
VOD Advertising
Nearly four quarters (78%) of all divisions are now selling VOD advertising.
(Percent of divisions that sell VOD advertising) |
2008 Survey |
2007 Survey |
2006 Survey |
Yes |
78% |
60% |
48% |
No |
12 |
17 |
25 |
No, but expect to in the near future |
10 |
23 |
27 |
Respondents were asked: “Does your company sell local VOD ads?” |
|
|
