Interactive Advertising Primed for Local Growth6/04/2000 8:00 PM Eastern
As we planned for the Cabletelevision Advertising Bureau's seventh annual Local Sales Management Conference, "A Cut Above: Staying Ahead Of The Media Revolution," much of the dialogue was on cable's future in interactive advertising.
The major cable networks have successfully adapted to the Internet as content providers, but it will be the cable systems who'll have the most dynamic future in interactive advertising-on both a national and local level.
As cable systems create their own Web sites, it has become apparent their success doesn't ride solely on their ability to manage interactive pathways into homes. Rather, it extends to their ability to brand themselves as a source for local and regional content.
Though local cable advertising is the fastest-growing revenue category for systems, it hasn't been their primary revenue source. However, this is expected to change when television commerce becomes a reality in the not-so-distant future.
According to Forrester Research, interactive-television services will bring in $7 billion in commerce and $11 billion in advertising within five years. Whether this prediction becomes actualized is uncertain, but it does emphasize cable's potential.
BIGGER PIECE OF THE PIE
Without a doubt, blending the interactivity of the Internet with television is the next step in the evolution of the cable industry. The unfolding opportunities that this convergence holds for cable advertising are momentous.
This union brings our business an all-new source of ad revenue and delivers to the cable industry the new dimensions of both electronic and television commerce. Such integration is what Charter Communications Inc.'s "wired world" is all about, so it's exciting to witness this vision becoming a reality.
For cable advertising, the revenue potential of this convergence has been predicted to be in the billions. Yet, this marketplace is so new and untapped, no Internet or cable research firm can accurately quantify it. Its true potential will be up to us. How can we creatively demonstrate its benefits to our advertisers and deliver the end product to their customers?
How would this convergence of TV and Internet work for cable advertising? Let's imagine a pizza restaurant that already is a regular advertiser on the local cable-television system. Right now, that restaurant runs several spots a week that attempt to drive viewers to the business with a telephone number to place orders.
As the local cable company, you have set up an online shopping mall as an electronic venue to get your advertisers even more exposure. A special advertising package allows your advertisers to not only run their regular television spots, but also place an ad on the online mall. As part of the package, you're constantly promoting the online mall via TV advertising on your cable system.
Online customers who visit the electronic shopping mall could then click on an ad for the local pizza restaurant and be instantly linked to the restaurant's Web site-a Web site that you helped set up just for that business. Once there, the customer could order his or her pizza online, selecting the toppings, the kind of crust, the method of payment, when it should be delivered and more.
But the picture for cable advertisers will get even better as cable systems begin to introduce customized "portals" on their channel lineups that blend the Internet and TV. These portals will give television viewers a quick, easy and familiar way to jump from regular television viewing to an exciting online experience.
How is it familiar? Because despite the explosive growth of the Internet, television-viewing time continues to vastly outdistance the time people spend on their PCs, if they even have a computer. Also, consider the number of people you know who have more than one TV in their home.
So now our local pizza place can also put an ad on your cable system's "portal." That ad could then link the customer to a pizza-ordering screen. And with the push of a few buttons-and without ever getting up from the couch-the viewer can have that large supreme pizza delivered right to the front door. Ah, the magic of television.
But this convergence doesn't just benefit current cable advertisers by giving them exposure to an online audience at favorable rates. The online shopping mall and "portal" can also provide an advertising avenue for new, smaller customers who can't afford television spots but need some local exposure.
In addition, offering your customers an online advertising resource adds value to what you provide and could help lessen advertiser churn and potentially rescue millions of dollars that otherwise would be lost. Being able to offer advertisers the combination of TV spots linked with a heavily promoted, interactive online presence delivers a serious one-two punch to your competitors.
We're truly entering a whole new world. But it's a world of potential and promise. This convergence of television and Internet hands us an untested opportunity to help our advertisers build their businesses while creating an all-new revenue stream for our industry. How well we do that will be up to us.
But how do we build traffic to cable's Internet and interactive advertising venues? Strong brand recognition is the key to our success.
USING BRAND STRENGTH
With powerful brand loyalty, cable networks and systems are able to effectively drive viewers to their Web sites. According to recently released Media Metrix data, cable network sites outdeliver broadcast network sites by a wide margin and have proven to be stickier sites.
As the media revolution continues, the cable/Internet combination will become an even more powerful tool for advertisers to successfully surround their desired consumers. And advertisers are quick to realize this.
During the last three months, BET.com-the Web site affiliated with Black Entertainment Television-secured several major national sponsorships with Kraft Foods Inc., FUBU, Blockbuster Inc., Southwest Airlines Co. and McDonald's Corp., as well as several blue-chip and Fortune 500 companies.
Like most cable networks, BET is tailored to meet the interests and needs of a particular audience and has become one of the most recognized cable brands. (BET's brand awareness rate in the African-American community is 95 percent.) This type of dominance has enabled cable networks to develop and market unique and successful Internet sites.
Demonstrating cable's high cross-over potential was a recent McDonald's cross-promotion on BET and BET.com, which saw dramatic increases in both program ratings and Web site hits during the campaign.
Cable viewers are more apt to incorporate interactive media into their lives than non-cable viewers. So it would make sense for networks to partner with cable systems to develop more opportunities to effectively interact with consumers locally and regionally.
Why partner with a network? Because systems can utilize the network's brand strength to build more traffic to their site.
One way for cable networks to increase site traffic is to promote Internet advertising or t-commerce on a local level, and increase the number of links to and from system sites. Another is to create network-affiliate sites that allow for local tie-ins and value-added promotional opportunities that can help build local community events.
There are many opportunities to place locally and regionally targeted banners on specific networks' pages. Local crawls also can be utilized to invite viewers to interact directly via instant response, opinion polls, chats and sweepstakes. Increased traffic to both the network-affiliate and system sites will create revenue streams on both ends.
BET is currently working to increase the number of links from local sites to its homepage, and has just launched an affiliate site that will allow for local tie-ins. By the end of this year, there will be local and regional promotional and advertising opportunities for affiliates to participate directly in BET's deployment of e-commerce. (BET.com plans to become a direct retailer of a variety of products and services appealing to African-American consumers.) Within the next couple of months, BET.com will also launch an auction area, bringing local buyers and sellers together in one location, which will allow for even greater opportunities for local involvement.
The possibilities are endless, but it is clear cable's strengths will only get stronger when we pull all of our assets together-raising the local and national cable brand to new heights and creating a unified cable-advertising force.
Wes Hart is vice president, corporate advertising sales for Charter Communications. Tallulah Anderson is national director of local ad sales for BET Networks. Hart and Anderson are co-chairmen of the CAB's seventh Annual Local Cable Sales Management Conference.