Interconnect Sales Going Like Gangbusters10/31/1999 7:00 PM Eastern
Ad sales proceeded through the third quarter at a briskclip, and they should maintain that momentum through year's end, according to a samplingof executives at six major interconnects.
But they were somewhat concerned about the outlook for2000.
A year ago, the interconnects faced a fuzzier fourthquarter because officials were worried about such things as a General Motors Corp. dealerstrike, an owner-imposed National Basketball Association player lockout and the potentialimpact on the economy from President Clinton's impeachment woes.
Virtually all interconnects cited entertainment, media andautomotive as being among the strongest contributors to their current growth. Each couldalso point to sectors where they've broken new business.
The New York Interconnect, for instance, has brought in newaccounts within the "dot.com" and packaged-goods segments, vice president andgeneral manager Eglon Simons said.
"We've also been seeing some dot.com business,"Philadelphia Interconnect vice president and general manager Jim Klunder added, althoughhe frets about the potential for a dot.com shakeout over the next year or so.
AdNex Detroit has cracked some new categories, too, notably"some grocery business and some dot.com business," general manager WayneHindmarsh said.
"We also broke some grocery-chain [store] business --a difficult category for us -- in a small way," Greater Washington Interconnectgoverning-board chairman Don Murphy said.
Simons said NYI's third-quarter-1999 revenue soared 66percent over the same period last year. After perusing its top-category lists for the pastfew months, he added, other hot categories included financial and retail.
"Automotive continues to be strong, but not as large apart of the mix" as in years past, he said. That's a good thing, he and otherinterconnect officials noted, since these sales operations have become less dependent onthe vagaries of one category.
The Philadelphia Interconnect "had a greatquarter," finishing up 50 percent, Klunder said, adding that its solid performersalso included telecommunications, financial and health-care buyers.
Within automotive, GM's recent move toward consolidatingregional buying out of New York, rather than via local dealers, has benefited thePhiladelphia Interconnect so far, Klunder said. In health care, the interconnect attractscompanies trying to reach consumers in Philadelphia, New Jersey and Delaware, he added.
National business has been "consistently strong eversince January," including packaged goods and fast-food accounts, Klunder said,adding, "Regional has been great, too."
Sales are also surging at Adlink. The Los Angelesinterconnect's marketing and communications vice president Vicki Lins said the thirdquarter jumped 48 percent and January through September rose 28 percent, adding that theinterconnect is on track to finish the year above $100 million.
Adlink added three insertable networks in August, for atotal of 35. One client Adlink broke recently is Pizza Hut, Lins said.
At Greater Boston Cable Advertising, general manager JeffSohinki said automotive, telecommunications and dot.coms fueled its"outstanding" third quarter.
GBCA also has secured "a tremendous amount of newbusiness, including [clients in] tourism and financial that we didn't have before,"he added.
At the Detroit interconnect, Hindmarsh reported "avery pleasant third quarter," with sales growth "exceeding our budget, bothnational and regional."
Murphy said the D.C. interconnect's first nine months"went great for us -- we couldn't be smiling any wider." National and regionalinterconnect business rose 22 percent and local 29 percent, with the third quarter alone"up slightly more than that."
By category, restaurants and auto dealers were among thebiggest contributors to local and issues-oriented advertising on the national and regionalside, he added.
For the rest of the year, Murphy said, there was enough onthe books to make budget, so the goal will be to see how far above budget the Washingtoninterconnect can go.
Simons described the first nine months as"stupendous." NYI's take rose 70 percent, due to a healthy marketplace, as wellas to its MSO participants having boosted their dedicated inventory from 15 percent to 25percent last fall and to its addition of four insertable networks earlier this year, for atotal of 20.
The final quarter is solid, as well, "pacing 45percent ahead of fourth-quarter-1998 numbers," Simons said. He added that Decemberwas already running 33 percent ahead of a year ago. (Year-to-year comparisons are applesto apples, as the results exclude Time Warner Cable, which quit the interconnect in early1998.)
The Boston interconnect and the Boston DMA in general are"very tight [for the fourth quarter] -- about as tight as I've seen it since weopened our doors in 1993," Sohinki said.
Hindmarsh projected that the Detroit interconnect should"at least meet budget" in the final quarter. October is strong, and November is"shaping up well," he said, but a lot depends on December.
Klunder was more hesitant about the fourth quarter,especially since the stock market seemed to get shakier in late October. "Maybe thisgood run [of the economy] is showing signs of weakness," he said
"As long as broadcast is aggressively pricing, cabledoes pretty well," he added. "That's been the case here this year." But ifbroadcast-TV stations in Philadelphia start feeling the impact of a sluggish economicclimate, the same "trickle-down effect" holds true, he said.
For 2000, interconnects are generally confident, although apossible softening in the economy and uncertainty about MSOs' commitment to cable's firstSummer Olympic Games coverage are clouding the picture.
Simons maintained that the Big Apple interconnect has abright outlook because "cable will continue to be strong -- the cable market is wellabove the general marketplace." He expected the CNBC/MSNBC Olympics coverage togenerate incremental dollars from existing accounts, once MSOs sign carriage contracts.
But political ads won't figure in his interconnect'sperformance, he added, since NYI doesn't take political advertising because "ourinventory limitations mean we couldn't service the candidates properly."
Political most likely will be strong in Boston after Feb. 1with the New Hampshire primary looming, Sohinki said. Once those battles are over, headded, Campaign 2000 contenders will likely turn to network cable and TV, with some spotcable tossed in.
"I anticipate being up," Hindmarsh said of 2000,although he, too, called the Olympics "a big question mark" for now. Once MSOsare signed, AdNex can start laying out some [sales] packages, he added.
Klunder said it was hard to get a handle on the Olympicsbecause of the uncertain cable carriage. Even when that's known, he's still not sure howbig demand will be in his market. "Not that many [clients] have been asking aboutit," he added.
The year 2000 is "hard to predict," Klunder said."It could be very good or rocky -- it could go either way. Who knows about theeconomy?"
He felt that political advertising should be"decent," even though there are no key races in Pennsylvania or New Jersey andeven though it's difficult to get a fix on presidential campaign spending until closer tonext fall.
With political, "it's a case of you're damned if youdo, damned if you don't," Klunder said, noting that political puts considerablepressure on operators and interconnects by tightening their inventory.
"It appears that [ad sales are] going to softenslightly" next year, Murphy said, projecting a 15 percent increase. The Olympicsshould be "a viable product," he added, and political advertising "shouldbe pretty strong, simply because of where we're located."