Advanced Ads: Message Muscle

11/08/2010 12:01 AM Eastern

Don Draper, the
cryptic and hypercompetitive
ad executive
from AMC’s
acclaimed series
Mad Men, surely
would be a fan of Cablevision Systems’
aggressive expansion into
next-generation TV advertising.

The cable operator has built a
comprehensive suite of interactive,
addressable and on-demand
marketing capabilities, and industry
observers say Cablevision
is leading the way for the rest of
the industry.

“Cablevision has been uniquely
out front,” said Tracey Sheppach,
senior vice president
and innovation director for ad
agency VivaKi.


For one thing, Cablevision’s fairly
consistent technology footprint
makes it more straightforward
for the MSO to roll out new
services. And the company’s
concentration in metropolitan
New York gives it a comparatively
affluent audience that is
attractive to advertisers.

Cablevision also is committed
to using its quiver of advancedadvertising
products as a competitive
weapon. “We want to
differentiate our inventory from
the local TV stations here. They
can’t do this,” said David Kline,
president of Rainbow Advertising
Sales Corp., which handles advertising
sales for Cablevision and its
programming division, Rainbow

Newer ad units, such as the
Optimum Select request-forinformation
interactive overlays,
are not an afterthought, Kline
said. RASCO’s sales reps are
regularly trained on advancedadvertising
capabilities — and
they have financial incentives to
close deals for enhanced ads.

As a result, RASCO has been
able to sell more inventory and
to charge more for it: “It’s driving
volume and price, which is a
difficult thing to do,” Kline said.
“For us, it’s all additive. We see
advanced advertising as a significant
complement to our linear

Overall, Cablevision has outpaced
its peers on ad-sales
growth. For the second quarter,
Cablevision’s local ad sales
were $33 million, up 27% from
$26 million the year prior. Th at’s
compared with a cable industry
average of 20% over the same periods,
according to Bank of America
Merrill Lynch research.

Advertising had one of its worst
years on record last year, but according
to Kline, RASCO has
gained momentum even factoring
that in. “Of course, ’09 was
down, but we’re ahead of where
we were in 2008 and that’s a good
thing,” he said.

In 2011 and beyond, Cablevision’s
advanced-advertising play
could grow even more powerful
if Canoe Ventures reaches its full
potential, by giving the MSO and
its brethren a way to deliver interactive
or targeted ads on a nationwide
basis. Cablevision is one of
the six founding operators behind
Canoe, along with Comcast, Time
Warner Cable, Cox Communications,
Charter Communications
and Bright House Networks.

Between Canoe and other key
initiatives, the TV industry is “fi nally
on the cusp of transforming advanced
advertising into meaningful
reality,” Bank of America Merrill
Lynch analyst Jessica Reif Cohen
wrote in a September 2010 report.


Advanced TV advertising may
represent a $14 billion opportunity
by 2015 for cable, satellite and
telco TV operators, increasing the
television industry’s share of total
media ad dollars to as much as
43% compared with 33% today,
according to Reif Cohen’s preliminary

To Sheppach, Cablevision’s advanced
TV advertising activities
make it the “Lewis and Clark for
Canoe,” scouting out the frontiers
of what’s possible and most

“It’s a great start,” she said of
the MSO’s efforts. “But they’re
one piece of the total television

Kline agreed that Cablevision
and Canoe have a symbiotic
relationship, likening it to the
way the NCC Media joint venture
sells spot-ad inventory on behalf
of several MSOs. “We have the
same considerations as the fellow
members of Canoe — they’re
there to bring national scale.”

Among Cablevision’s latest advanced-
advertising pushes, the
operator is letting clients deliver
different local ads — based on individual
household information,
such as income — to all of its 2.9
million digital subscribers, starting
in the fourth quarter.

That’s after Cablevision last
summer commercially launched
the cable industry’s largest addressable
TV-advertising service
with 500,000 subscribers in
Brooklyn and The Bronx. The operator
is working with targetedadvertising
startup Visible World
to deliver the ads.

Cablevision hasn’t identified advertisers
that have used the targeting
capabilities, but Kline said it
has worked with agencies including
GroupM, SMG and Universal
McCann on the service — and
claims they have already placed
campaign renewal orders.

The Visible World system lets
local advertisers deliver up to
five different spots, segmented
based on a variety of demographic
criteria. For example, a wireless
carrier could show one version to
Hispanic households, while displaying
a different one to subscribers
with teenagers.

Cablevision also has seen good
initial traction on Optimum Select
RFI, which presents an overlay
on the bottom third of the
screen that gives viewers the option
of clicking “select” on their
remote to order a product sample
or brochure in the mail from
a 30-second spot.

Among the first advertisers to
buy into the request-for-information
service were Unilever,
Gillette and Benjamin Moore.
RASCO found that initial conversion
rates — the percentage of
viewers who, after initially clicking
on an ad, successfully acted
on the RFI — ranged from 40% to
more than 70%.

The MSO also offers a telescoping
feature to link from a
30-second spot to an advertiser’s
dedicated video-on-demand
channel to learn more about a
product or service, and has built
VOD channels in the last few
years for customers including
Pillsbury, Disney Vacations, U.S.
Navy, Dove Chocolate, General
Motors, BMW and Sony. Cablevision
recently signed MXenergy,
a supplier of natural gas and
electricity throughout the United
States and Canada, which has
launched a VOD channel featuring
original content providing
consumers with energy tips.


Engagement on the VOD channels
is extremely high, Kline
said. For example, viewers who
click through to Mattel’s Barbie
channel spend an average of 19
minutes there. “When you have
a 30-second ad that has good
viewership, it makes it easy to do
telescoping,” he said.

On the technical front, Cablevision
recently completed the
deployment of Zodiac Interactive’s
PowerUp framework software,
running on Cisco Systems’
native set-top box environment.

From a Canoe perspective,
what’s worth noting is that the
Zodiac software stack includes
headend and set-top support for
CableLabs’ Enhanced TV Binary
Interchange Format — the specification that is enabling Canoe’s
initial RFI advertising service.

Kline noted that Cablevision
has prepared the technical foundation
for EBIF, but “we haven’t
made the decision as a company
about when to enable that” for


Clearly, the company believes
there’s strength in the RFI concept.

Rainbow’s AMC is among the
first networks selling the Canoe
RFIs. In its upfront presentations
this spring, AMC was asking a
flat fee of $100,000 per month —
on top of the baseline price for a
30-second ad — for the ability to
deliver RFI spots to a combined
Canoe-Cablevision footprint of 10
million homes in 2010, according
to Reif Cohen. That would include
60 Canoe ads and 352 in Cablevision’s
footprint per month. (Cablevision
said those figures are
inaccurate but declined to provide
additional information.)

Meanwhile, Cablevision continues
to charge ahead in another
area that has long held promise
for the industry: placing ads dynamically
around VOD content.

Traditionally, advertising for
free VOD has had to be hardwired
together with the content
itself, meaning the ads have
had to be bought and placed 30
to 90 days ahead of time. Cablevision
allows advertisers to
refresh their spots the same day
and place ads against a variety of

On dynamic VOD ad insertion,
“Cablevision is leaps and bounds
ahead of others,” Craig Woerz, cofounder
and managing partner of
media agency Media Storm,
said. With the technology, he added,
TV providers are “reintroducing the
idea of what free VOD is to marketers
… and where it fits in, given the
other demands on the budget.”

Cablevision actually got started
with VOD advertising back in
2005, with Optimum Auto and Optimum
Homes. Th ose services are
interactive, on-demand channels
with classifi ed listings of cars and
homes for sale in an area, along
with companion Internet sites.

For its part, Rainbow has been
testing BlackArrow’s dynamic
VOD advertising system with
Bresnan Communications for
about a year, serving promotions
for its own programming
against its own VOD assets. The
multiphase trial of BlackArrow
Advanced Advertising System is
designed to determine how Rainbow
can work across its multiple
distribution partners to implement
dynamic, addressable VOD
advertising on a wide scale.

“Given the dramatic increase in
subscribers viewing on-demand
programming, we are looking at
ways to provide our advertisers
with additional vehicles for building
brands and driving purchases
in this medium,” Rainbow senior
vice president of broadband Dave
Evans said in a statement.

On a national basis, Canoe expects
to conduct pilot tests with
programmers in 2011. “VOD [dynamic
ad insertion] is the logical
next step in the evolution of our
product lines, adding a national
programmer-driven on-demand
platform to our national ITV platform
to bring greater control and
interaction to television,” Canoe
senior vice president of products
Jim Turner said in a statement.


Advanced advertising isn’t just
for large, national brand advertisers,
according to Kline. Businesses
of all sizes, ranging from
dentists to ski shops, are finding
success with the formats. And
Cablevision now is getting ad
dollars from direct-mail budgets,
instead of just tapping into
money set aside for local TV.

“You have some people who
say, ‘Boy, I just want to do traditional
advertising,’ ” Kline said.
“But our advanced ad capabilities
are opening doors for us that
might have been closed before.”

Next up: Cablevision is currently
building a campaign-management
system that will allow
the MSO to deliver ads across all
platforms — TV, online and mobile.
In 2011, the operator also expects
to launch a “T-commerce”
capability, to let subscribers actually
purchase a product onscreen
after watching an ad for it.

“It’s important to be first,” Kline
said. “But you don’t have to first, as
long as you’re the loudest.”

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