On the Road to Double-Digit Growth4/28/2006 8:02 PM Eastern
Local cable ad sales executives are confident that high-growth categories will generate enough heat to dispel the chill from cooling domestic car spending. So confident, in fact, that they expect to see double-digit growth in the year ahead.
So where is the money coming from?
“Real estate, health care and financial services continue to be hot categories for local cable, with retail also showing gains,” Cabletelevision Advertising Bureau president and CEO Sean Cunningham said. “The options cable can deliver to a local realtor, regional hospital or new bank branch are powerful and have been taken notice of by marketing decision makers in these industries.”
Larry Fischer, president of Time Warner Advertising Sales, agreed. “Health care definitely has been a growth category for us,” he said. “Hospitals, in particular, have gotten very competitive and they like our video-on-demand platform, which allows them a half-hour of unique programming.”
The real estate category has also spiked, said Cox Media vice president of media sales and marketing Sharon Frazier. “This is partially due to the softening of the market which necessitates more promotion to sell properties, she said. “[But] a large part of this growth is due to our efforts to target this category with dedicated real estate listing products.”
DRIVING CAR ADS
But operators haven't stopped kicking the tires on car spending. Local automotive, despite national slowdowns, is thriving among Comcast Corp. systems, according to Comcast Spotlight vice president and divisional managing director Kevin Cuddihy.
“Local dealer spending appears to be growing for a couple of reasons,” he said. “While auto sales are not seeing strong growth years, the local dealer can increase the share of business by targeting specific geographic areas — targeting that cannot be done by broadcast and radio.”
Comcast Spotlight, using SRC Mapping and auto data from marketing firm R.L. Polk & Co. — which tracks individual car make sales across the country — can show car dealers where their customers are coming from and how to more effectively target them.
“In tough times, people want less waste from their ad dollar,” Cuddihy said.
“Auto revenue is mixed across the board,” said Cable One Inc. vice president of ad sales Mike Bowker. “We have poached some automotive revenue from print. In one market where there are two newspapers, we were able to take 100% of the second newspaper's share.”
Bowker is budgeting 10% increases for Cable One. “Fortunately, none of our markets are flat this year,” he said. “We have enjoyed an outstanding first quarter and are pacing well for second.”
Cuddihy also predicts “double-digit” growth for Comcast, as does Frazier for Cox Media; while Fischer projects “small double-digit” increases for Time Warner.
Cuddihy predicted that the areas for significant growth included “VOD technology, sponsorships [especially of spots adjacent to existing video-on-demand content] and our Dynamic Publishing Platform, a new tool that lets advertisers convert print ads, such as classifieds, into slideshow-style video sequences, which can be adapted for use on Comcast Searchlight.”
Time Warner Cable, like Comcast, also has been active in pushing other platforms for its automotive advertisers.
“We have a Web site called BeepBeep.com where car dealers can list all of their inventory,” Fischer said. “We even got [NASCAR driver] Jeff Gordon to endorse it. But the opportunity to use it only goes to those who already advertise on our cable networks.”
Local car dealers are spending more with cable, Cuddihy said. “Clearly, tier one and tier two automotive spending has been off with some U.S. manufacturers, but many foreign makes continue to increase spending,” he said. “For a local car dealer, it's all about share and Comcast can focus sales efforts and specific messages.”
Cunningham remains optimistic about automotive as a category.
“Automotive is cable's No. 1 category and will continue to grow,” he said. “Automotive is not just a strong core business, but it's also behind much of the early on-demand TV trials in a variety of markets demonstrating the expansion beyond linear advertising into other video applications.”
“We are having success winning local automotive from print and broadcast,” Frazier agreed. “In fact, our total automotive spending is up over last year. This is driven purely by import dealers. They are more than making up for the decline in domestic brands.”
Frazier said Cox Media was the first to harness cable's on-demand platform for advertisers with FreeZone. “And we are seeing local success with interactive advertising,” she said.
Most of the major operators have their own unique examples.
Comcast, for instance, has its VOD Showcase platform where advertisers can highlight products and services on their own named channel.
Classified On Demand, offered by Comcast Spotlight's Chicagoland system, allows car shoppers to connect with sellers 24 hours a day, seven days a week. Since it launched in March, 1,800 automobiles have been listed on the platform, which is available to all 1.7 million Chicagoland Comcast customers. Comcast Spotlight in Chicago represents 45 networks targeted geographically within 34 distinct selling zones.
In Pennsylvania, realtors Prudential Fox Roach Inc. have teamed with Comcast to provide the region's first real estate on-demand service, making videos of local listings and virtual home tours available to more than 1.5 million customers in southeastern Pennsylvania, southern New Jersey and northern Delaware.
Since its debut last May, Prudential's “Real Estate On Demand” has generated 50,000 views per month.
“Technology [makes advertising] more effective and engaged with our viewers,” Cuddihy said. “This is what our advertisers tell us they want, and we're working daily to deliver these new products.”
Along with VOD, operators are looking at geo-targeted and interactive advertising to drive business.
According to Fischer, Time Warner has “great success with interactive ads. It's what we call Active Advertising.”
For a recent campaign, American Express Co. sponsored the movie trailer for The DaVinci Code. Time Warner's digital-cable customers were able to click through to learn what area theaters would be playing the movie, find out dates and times and purchase tickets.
Advertisers, in turn, can learn just how many “hits” a sponsored trailer gets within three seconds. “We're not allowed to give specific viewer-home data,” Fischer says. “But we could tell American Express the total number of people who responded.”
Among cable operator ad sales executives, the question of whether or not spot clients were shifting towards agency-led accounts (often larger and more lucrative) and away from local retail brought different views and different interpretations.
“Yes, we are seeing more and more small direct accounts signing with agencies,” Bowker said. But Time Warner, Cox and Comcast executives disagreed.
“Agencies haven't been as totally active,” Fischer said, “and they are putting more dollars into network cable.”
“This (client shift toward agency led accounts) is a real misconception of the cable environment today,” Comcast's Cuddihy said. “Certainly, the major MSOs got together to build interconnects to go after broadcast spending in our markets; and, yes, over the past four or five years, interconnect growth has outpaced that of local growth, but I am unaware of any MSO moving away from local retail.”
Frazier said retail has been a strong growth category for Cox, but the tougher ad climate has the company pursuing more new business and working with direct advertisers. “Alternative revenue streams are increasingly important for us and we are committed to pursuing new media to help us meet customer needs with innovative new services,” Frazier said.
Among the alternatives Cox is going after is the “vanity category,” which Frazier said includes “cosmetic surgery, cosmetic dentistry, Lasik eye surgery, medical/spa treatments and hair replacement surgery.”
When asked if local cable's continued growth has been a spur for finding new account executives and improved sales talent, Fischer — noting Time Warner is now the exclusive sales rep for SportsNet New York, the cable outlet for Major League Baseball's New York Mets — said, “I just hired six new [account executives] and they came from [New England Sports Network], CBS Sports, the [National Basketball League], SI.com, and Madison Square Garden [Network] — just about the best from everywhere.”
“Our new VOD offerings in real estate, autos and classifieds call for specialists in those categories,” said Comcast Spotlight's Cuddihy. “These specialists are on realtor boards, come from auto dealerships or have worked in the auto-classified business and are involved in the recruitment business today. They bring relationships, a great knowledge base, and the ability to jumpstart new business for us as we move forward with our new products.”
Cox Media has its own Account Executive Development Program in conjunction with Howard University's Media Sales Institute. “This has been an outstanding source of bringing top notch team members and more diversity into our business,” Frazier said.