Making the Right Connections5/18/2003 8:00 PM Eastern
Comcast Corp.'s cable unit has spent the past few months cobbling together the pieces of a national interconnect. Now, cable's largest operator has set its sights on deriving some $1.1 billion in ad sales from that extended reach.
The unprecedented goal stems from a broader infrastructure assembled in the wake of the Comcast-AT&T Broadband merger, which became official last November.
With that marriage, Comcast inherited 10 interconnects in such key designated market areas (DMAs) as Boston, Denver and Dallas-Ft. Worth, to go with 15 Comcast MarketLink operations in such areas as Washington, D.C., Baltimore and its home base, Philadelphia.
These and other interconnected DMAs collectively grew ad revenue 24% per subscriber in 2002, according to Comcast Ad Sales president Charlie Thurston.
|Lay of the landscape|
|DMA Area||Cable Rank||Cable Homes||Comcast Homes||Channels/Penetration|
|*inherited from AT&T Broadband
SOURCE: Comcast/National Cable Communications, as of 4/1/03
Household totals are approximate. Reach percentage is of cable households.
|Salt Lake City*||36||399,900||333,530||33/83|
Since the merger, Comcast has formed 16 more interconnects in such markets as Seattle, Miami, Portland, Ore., and Salt Lake City. By July 1, the company anticipates another eight interconnects under its banner, for a grand total of 49 in 54 major DMAs from which Thurston and crew hope to wring some $1.1 billion in ad volume during 2003.
Comcast systems reside in 72 of the 210 DMAs tracked by Nielsen Media Research.
The No. 1 U.S. cable operator is also looking to forge interconnects in other areas, as a means of expanding the national or spot territory advertisers can reach in one shot.
To that end, Comcast recently joined forces with Adelphia Communications Corp. to set up an interconnect for West Palm Beach, Fla. It also teamed with Time Warner Cable, Charter Communications Inc., US Cable and Mediacom Communications Corp. to make over a comprehensive area operation in Minneapolis-St. Paul.
As of late April, Comcast owned, co-managed or was involved with interconnects that reach more than 49 million households.
For Thurston, the longtime grand master of Los Angeles interconnect Adlink (whom Comcast brought into its fold 14 months ago, to head ad sales), the transition has been a relatively smooth affair.
"When I joined last spring, there were 15 interconnects completed or on the way to that point," he said. "The good news there is that I could hit the ground running and prepare for the post-merger environment."
During his 14-year tenure, Thurston and his management team pushed Adlink's operational envelope from 20 linked systems with under $1 million in annual revenues to 80 interconnected operations landing more than $150 million in yearly sales.
Over the past year, several members of that successful team — notably senior vice president of sales Hank Oster, technology chief Paul Woidke and vice president of marketing and communications Vicki Lins — have reunited with Thurston at Comcast, bringing their acumen and vision.
"All along, the mandate here is to take some of the best practices we had, plus some of the best practices AT&T had in their sales and apply them to a new Comcast landscape," Lins said. "That's why culture clash wasn't a big issue."
The challenge that lies ahead for Thurston and his seven-member executive team is to effectively make Comcast a one-stop port for any plan that an advertiser, agency or media buyer dreams up. The flexibility and opportunities Comcast will proffer include national or regional spot sales and local campaigns that can be directed to one channel or to scores of networks, and can extend to one city or a number of DMAs.
"You want it all coming under one umbrella," Thurston said.
The key: Have dedicated sales teams working in the field — three per location. One group covers local retailers, another makes calls on regional advertisers and the third concentrates on national advertisers.
"That way you get dynamic inventory always in a market," he added. "You can shift the inventory in certain directions from situation to situation."
The plan also calls for each campaign to be exploited for maximum context and impact, where marketing techniques are applied.
"It's taking an integrated approach, from building the brand to presenting the message consistently in different forms beyond spots, such as direct mail and outreach marketing programs," Lins said.
Comcast retained three agencies last month to drum up strategies and promotional support among clients: Lippincott Merger for brand-building; Ketchum for public relations; and Tucker Hampel Stefanides & Partners for marketing communications.
Adlink applied its integrated marketing and sales formula in Los Angeles, resulting in heavy sponsor participation in such local events as Comedy Central's "Laugh Riots" concert, and on-air interstitials like concert calendars on VH1 avails.
Comcast interconnects will develop similar directions to work toward the $1.1 billion mark. Various types of local retailers are projected to account for half the total, with national and regional spots representing the balance.
Back-office billing and digital ad-insertion compatibility is another high priority for the growing interconnect roster. Thurston anticipates his operations in the top 25 DMAs will have timely and seamless processes in place by mid-fall, with most of the other locations getting there in 2004.
The ideal scenario: give clients the opportunity to buy into a core package of 40 channels — any or all of them — first within the top 25 DMAs, and then elsewhere later.
"There's nothing more frustrating than an advertiser buying so many networks nationally, and then trying to buy them on a spot basis," said Thurston. "The History Channel might be great for insertion in 30% of their homes base, or TLC in seven out of the top 30 markets.
"If you want to buy so many networks deep, 18 or 40 to 50 and then some, you can do it for one market or across markets without hassle."
Comcast's moves in the post-merger environment so far are catching the attention of Howard Nass, principal with HN Media Services.
Nass believes it is poised for a revenue windfall — provided it can deliver the uniform buying experience.
"You don't want to make any mistakes when you shoot for $1.1 billion," Nass said. "They have a great model to follow in what was done at Adlink, playing in a situation five times as big. And they have more supportive management [Comcast Corp. CEO Brian Roberts and cable unit president Steven Burke] behind them.
Besides the interconnects, Comcast with its 21.5 million households is in position to create an unwired network for spot buys, which it can use in a manner similar to how the broadcast networks use their owned-and-operated TV stations.
"Think about what that offers to my peers, my competitors and me," Nass suggested. "You can attract advertisers who just want an aggregated audience for all the cable news channels, or all the general-entertainment channels, and they'll get the audience because of Comcast's base. Their upside potential there is huge."
PHD, which handles advertising for DaimlerChrysler Corp., also finds Comcast to be a solid resource.
"They know they have to get more competitive with broadcast TV," said PHD senior vice president and director Peter Stassi. "They're reacting to our needs with special promotions and sponsorship opportunities. In operation, they're being like a TV station, as opposed to being cable."
Operation Iraqi Recovery
As Comcast's interconnection activities continue, the MSO is looking to make up avails lost due to coverage of the Iraq war during March and April.
Thurston estimates that in March, advertisers cancelled $2.5 million in buys due to war coverage, while some campaigns scheduled to launch in April were postponed or cancelled. He believes most of the lost revenue will be recouped by the end of June.
Some of that recovery may flow from the Latino programming tiers that Comcast started to roll out in many markets earlier this month. The interconnect in Miami, where one tier was deployed, has a separate Hispanic sales unit.
"That's a huge direction we'll head in," Thurston said.
Further down the road, Comcast will look to mine advertising options from video-on-demand, interactive services, HDTV, the high-speed Internet and even digital video recorders.
No one will offer clues as to when such exploration will turn into deployments.
"We're taking all the ancillary product directions seriously and will incorporate them into tomorrow's business strategy," Lins said. "They will come around the corner."
|DMA/MSOs||DMA Rank||Cable Homes||CableLink Homes||Channels/Reach (%)|
|Source: National Cable Communications, as of 4/1/03
Household totals are approximate. Reach percentage is of cable households.
|Cleveland, Ohio Adelphia/Buckeye/Comcast/Massillon Cable/Time Warner Cable||13||1,040,670||979,200||24/94|
|Hartford-New Haven, Conn. Cablevision Systems/Comcast/Charter/Cox/Tele-Media||27||868,400||833,600||24/96|
|Grand Rapids, Mich. Charter/Comcast/Cox||38||646,920||578,840||20/99|
|Buffalo, N.Y. Adelphia/Charter/Cox||44||472,100||482,100||30/102|
|Providence, R.I./New Bedford, Mass. Comcast/Cox||48||467,950||455,200||30/97|
|Scranton-Wilkes-Barre, Pa. Cox/Comcast/Susquehanna/Time Warner Cable||53||496,330||486,200||14/98|
|Albany-Schenectady-Troy, N.Y. Adelphia/Mid-Hudson Media/Time Warner Cable||55||376,150||367,300||33/98|