Marketing

OnMedia’s Primary Focus Is on Secondary Markets

2/24/2006 7:00 PM Eastern

Last year wasn’t a banner one for cable ad sales, but Mediacom Communications Corp.’s OnMedia division still managed single-digit growth, in spite of all the dollars spent by political candidates in 2004 — translating into an 11% hike in ad-sales revenue, if those political dollars are not factored in.

“Last year may not have looked so good to most MSOs, because of the money we all received in 2004 from the presidential election,” said Sonja Farrand, OnMedia senior vice president.

“It was such a windfall for all of us that no cable company could match it in 2005,” she said. “And even though we saw single-digit growth in ad sales over total 2004 numbers, our cash flow rose 20% in ’05. That’s pretty good considering how strong ’04 was, and the fact that we were hit by [Hurricane] Katrina in our southern regions.”

OnMedia has other unique challenges, too. The company’s footprint is spread out over 23 states, primarily in secondary markets. That makes national ad sales a tough job.

However, local sales are generally strong, because cable is one of the few and most cost-effective ways to advertise in those markets. In addition, OnMedia’s ad execs are well-versed in what they do — and in their clients’ business — said Chuck Thompson, senior vice president and director of sales and marketing for the Cabletelevision Advertising Bureau.

“I recently made a number of sales calls with them in Iowa and they are very strong,” Thompson said. “I never heard one negative piece of feedback in the 12 sales calls I did with them and I have never had that happen to me before.

“They go in with a knowledge base of the clients and they have a 'One TV World’ attitude that is essential for breaking down the barriers between broadcast and cable spot advertising.”

OnMedia sells ads in nine DMAs: Des Moines; Cedar Rapids/Dubuque/Waterloo, Iowa; Davenport/Bettendorf/Rock Island/Moline, Ind./Ill.; Columbia, Mo.; Springfield, Mo.; Paducah/Cape Girardeau/Albany, Ga.; Columbus, Ga.; and Mobile/Pensacola, Ala./Fla. It works with several other MSOs in markets where it is not the dominant provider including San Francisco, Chicago and Los Angeles. The company has 215 employees.

Although OnMedia is involved with interconnects in many of its markets (some it operates, others it leaves to MSOs with larger footprints), the division opted six months ago to move away from the hype over DMA coverage. Instead, OnMedia group vice president of advertising sales Steve Litwer said, “We refocused on what we do best: geographic and demographic targeting, zone by zone.”

Automotive sales make up 15% of OnMedia’s sales, Farrand noted. That’s followed by furniture stores (8% of sales), medical health care, entertainment, travel services and retail department stores. OnMedia has hired Jim Doyle & Associates, an expert in the auto-sales business, to conduct clinics and media presentations for ad clients. And while automotive manufacturers spent fewer national ad dollars last year, OnMedia’s auto segment saw significant growth because of its strong relationships with local dealers.

Farrand and Litwer welcome national and regional ad dollars — OnMedia formed a regional sales team last year to bring in more regional and national revenue — but they have opted to concentrate on what they do best: local spot sales.

National and regional sales totaled 13% of the division’s revenue in 2005, up from 10% three years ago. “Sure, I want those dollars,” Litwer said. “But I’m not going to relinquish the local emphasis that we excel in.”

Last summer, OnMedia launched a business-to-business campaign called “Precision, Value and Results” and created a new logo and slogan, “OnMedia: Precision TV Advertising.” The company employed direct mail and TV commercials to convey its new message. It plans to continue that campaign this year.

Farrand and Litwer came to Mediacom when the MSO bought 800,000 cable subscribers from AT&T Broadband in 2001. At the time, Mediacom depended on third parties to generate ad sales. Today, Farrand noted, OnMedia reps over 80% of Mediacom’s 1.4 million customers and about 250,000 of other operators’ customers for a total 1.2 million subscribers.

“Anyone can go to a client or agency and present its avails. What makes us different is that we can go to the client and bring them ideas on how to run their businesses better,” Litwer said.

Mark Birdnow, who owns four car dealerships around the state, is sold on cable and his OnMedia account executive Anne Durscher.

“Anne is one of the nicest people I have ever met in my whole life,” he said. “She is one of the few ad people I deal with directly. The rest I leave to my agency. But she does personal things like remembering my birthday and even my wife’s birthday, for goodness sake.

“Of course, the product itself is reasonable and effective. When you can get someone to see an ad and it costs $50 on cable vs. $500 on broadcast and still have the same impact, that is worth it. People don’t distinguish whether they’re watching cable or broadcast anymore.”

Birdnow spends the bulk of his $22,000-per-month ad budget on broadcast, but his ads are seen more frequently on cable. Birdow spends about $2,500 a month on cable advertising. And he sees the value in the product.

“Last November and the first half of December, I cancelled all broadcast media buys,” he said. “But I didn’t cancel any buys from OnMedia during that time.”

September