Cable Operators

Selling in Lockstep

5/22/2005 8:00 PM Eastern

With cable operators and networks running local ad-sales promotions in dozens of markets nationwide, consumers don’t have to travel far to see Court TV’s Mobile Investigation Unit truck at a mall or to pick up sweepstakes entries for events such as the Turner Networks Group-sponsored trip to the NBA Playoffs or a chance to visit the set of FX’s Nip/Tuck.

Local broadcasters continue to dominate cable operators in ad revenue, but some cable executives insist that the tide is turning, thanks in part to these local affiliate-sales promotions, which often help operators close deals with advertisers who are lured by the promise that a promotion will drive more traffic to their stores.

Operators are also looking to drive additional local ad revenue by holding upfront events for advertisers in smaller markets, taking advantage of the resources of their programming partners to differentiate themselves from broadcasters.

Court TV’s Mobile Investigation Unit tour and digital fingerprinting events have generated more than $5 million in incremental local ad-sales revenue for operators since 2002, says senior vice president of affiliate ad sales and marketing Ellen Schned.

“Local promotions are the differentiator between cable and broadcast in the local markets,” Schned says.

The model for Court TV’s local ad-sales promotions, which is similar to that of other networks, is to give MSOs 30-second cross-channel spots that contain a 10-second tag the operator can sell to local advertisers.

Court TV holds 90 digital fingerprinting events each year. The promotion allows operators to sell local auto dealers, malls, grocery stores and other advertisers the ability to host the events, which drive traffic to their stores. Operators get to co-brand signs touting the events, and demonstrate new products such as video on demand.

The MSOs drive ad-sales revenue from local affiliate promotions, and programmers benefit from the cross-channel spots for their shows that operators agree to run in exchange for getting access to the events.

PROMO DOWNSIDE

But not every network promotion is greeted with open arms by the operators. Fox Cable Networks Group vice president of affiliate advertising sales Michael Cooper says many operators have said that “a lot of what they’re getting through the networks isn’t necessarily on par with the type of media value that programmers are getting in return. They think there’s an imbalance in some cases.”

Cooper says Fox’s focus has been to increase the value of the premiums or prizes operators get through the events in exchange for the number of promotions they run.

Fox’s “Destination Exploration” promotion for National Geographic Channel, which ran during the first quarter, awarded a winner and a guest a trip to Machu Picchu in Peru.

Fox’s main local ad sales push for FX this year is its FX Originals promotion, which Cooper says generates anywhere from $75,000 to $350,000 in incremental revenue for operators.

The FX Originals promotion requires affiliates to run 100 cross-channel promos each for three original programs — Nip/Tuck, Rescue Me and The Shield. Viewers are encouraged to enter a sweepstakes to win a trip to the set of one of the three programs by picking up entry forms at local advertisers, including car dealerships and restaurants.

Cooper says most operators run more than the required total of 300 cross-channel spots because of demand from advertisers.

Time Warner Cable regional vice president for the northeast Joe Noonan says local ad-sales promos help differentiate operators from the local broadcasters they’re competing with for ad dollars.

“Anybody can put a trip together and send you to California wine country, but only MTV can put together a trip to the Video Music Awards,” Noonan says.

Turner Networks Group this year offered cable affiliates 13 promotions for five cable networks to systems with at least 30,000 subscribers, reports senior vice president of strategic marketing Jennifer Mirgorod.

They include a 30-city “Get Animated” tour for Cartoon Network, which focuses on physical-fitness activities for kids, running from May 30 through Sept. 5. Activities at each of the stops include a basketball challenge, wall climbing tower, hockey maze as well as jump-rope and hula-hoop games.

Turner is also running a “Ready to Race” promotion for its National Association of Stock Car Auto Racing coverage on Turner Network Television from July through November. The first 150 systems that enter the promotion will be eligible for a local prize and will also be entered for a chance to win a trip to a NASCAR Nextel Cup race in Fort Worth, Texas.

Each system will also get the choice of six tickets to another Nextel Cup race or a NASCAR merchandize prize package.

Mirgorod says cable systems typically give the prizes from promotions like “Ready to Race” to advertisers that buy spots.

Turner is also running a local ad-sales promotion built around Cable News Network’s 25th anniversary, and a “Safety Tips” promotion featuring CNN Headline News anchor Nancy Grace.

About 140 systems have signed up for the Safety Tips promotion, in which affiliates get an Apple iPod and Bose Sounddock music system in exchange for running taggable cross-channel spots.

OPERATOR STRATEGIES

Comcast Corp.’s new local ad-sales promotion strategy is to build its own promotions, and then encourage programmers to participate by providing talent for its cross-channel spots. The MSO is running two promotions this year — “Simply Balanced” focuses on the health, wellness and fitness category, while “Home In On It” centers on the home-improvement and design category. Comcast said “Home in on it” generated about $7 million in revenue during 2004, while the “Simply Balanced” campaign pulled in $5 million for the MSO last year.

The MSO also runs sweepstakes ad-sales promotions from programmers, but Comcast Spotlight senior director of marketing Kellie Grutko says the company avoids getting locked into running a set number of cross-channel spots for networks in exchange for participating in the promotions.

“We’re moving away from a cut and dry, 'here’s the number of spots,’ to a negotiated value for the promo spots. It was getting to be an antiquated system,” Grutko says.

One of Time Warner Cable’s local ad-sales strategies in recent years has been to pitch cable networks that traditionally have less demand from local media buyers by creating a discounted upfront package advertisers can purchase early in the year.

“We’ve created a discount to drive the upfront package, and then we’ve gone out very aggressively with a cable capabilities pitch, trying to write long-term, 52-week deals with advertisers,” Noonan says.

According to Noonan, the goal is to have 50% of the MSO’s local ad-sales budget on the books by Jan. 31, noting that Time Warner’s northeast region had booked 55% of its inventory by Feb. 1.

Time Warner supplies media buyers with weekly rate cards that detail the percentage of inventory available by network and day part, and raises its rates as the inventory begins to run out.

“If you were to buy ESPN when it’s less than 50% sold, it would be the base rate. When it gets to 65%, it’s ratcheted up again, and when it goes up to 88%, it goes up again,” Noonan says.

In years past, Time Warner has also held local upfront presentations in Albany, N.Y.

One year, the company held a mock trial, trying fictitious Acme Advertising for not putting cable into its media mix.

Another year, Time Warner held a fake pageant, where several cable networks that it sells were represented by characters such as a Madonna look-alike for MTV: Music Television and a model in gardening attire for Home & Garden TV.

Court TV has also sponsored local upfront presentations for cable affiliates, Schned says.

Last year, the network held events for Comcast in Albuquerque; Cox Communications Inc. in Las Vegas and Oklahoma City; and Adelphia Communications Corp. in West Palm Beach.

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