Ops Find New Ways to Tap Quiet Giant7/16/2000 8:00 PM Eastern
It took Chris Eigenberger and Charter Communications Inc. in Madison, Wis., seven years to find the best approach to packaging and selling photoclassifieds, but they finally seem to have gotten it right.
This year, the operation will pull in around $600,000 from photoclassifieds. And Charter's hard fight to make them successful is a common story in the industry.
Charter and other operators have found that the original concept for photoclassifieds-also called photo-advertising-just didn't work that well.
Rather than creating newspaperlike ads and placing them in a lineup rotated continuously throughout the day, they are now programming photoclassified channels as local-information channels with advertisements mixed in.
"It's not for everyone or every market," Eigenberger said. Investing in personnel and working to shape the product to individual markets is crucial, he noted.
Photoadvertising first appeared in the mid-1980s, but it quickly floundered in the late 1980s and early 1990s, said Kathy Schifferle, CEO of Chico, Calif.-based Multi-Image Network. MIN is a major supplier of photoclassified-production equipment.
At last year's Cabletelevision Advertising Bureau Local Cable Sales Management Conference, MIN distributed a promotional piece headlined, "Want your piece of $25 billion in newspaper local ad revenues?"
The copy went on to boast that its photoadvertising plan could enable an operator to generate $15 per subscriber. It said Time Warner Cable in Syracuse, N.Y., relaunched its channel last year and "increased their revenue 222 percent."
For much of the mid-1990s, many operators were distracted from the advertising option by mergers and acquisitions. But that consolidation has made photoclassified sales far more viable, as many operators now cover entire markets.
Many companies, such as Charter Media, Charter's ad-sales arm, simply needed some experience with the new advertising.
In hindsight, Charter's early strategy for photoclassifieds was less than effective. Some early mistakes included selling time in five-second intervals, which created massive overhead in order to manage continual copy and schedule changes for hundreds of customers.
Charter also failed to press advertisers into long-term contracts, so it continuously had to reschedule and book ads.
"Logistically, it was a nightmare, and it just wasn't going anywhere," Eigenberger said.
Now, the company emphasizes longer advertising segments in order to reduce administrative hassles. The MSO has also moved away from the "wheel" format, and now packages classifieds alongside more thematic programming or information.
MAKE IT INTERACTIVE
Charter goes out of its way to make the content as interesting as possible, despite its current lack of video. It uses voiceovers and high-quality graphics, runs quizzes and incorporates other elements to increase the audience's involvement more than the ads can alone, Eigenberger said.
It adds other content, such as "Madison's Most Wanted," a police blotter of sorts that identifies locally notorious criminals. That segment is sponsored by a security company and a car-alarm company.
Charter also presents "Meet the Pets," which lists pets available for adoption. A pet store and the local chapter of The Humane Society of the United States sponsor that program.
"You've got to create some sort of programming in addition to the ads to draw in the viewers," Eigenberger said.
Charter has even renamed its photoclassifieds channel a few times, all in the hope of improving success. It started out as the "photoclassifieds" channel, then changed to "Cable Marketplace," and it is now dubbed CTV (for Consumer Television). In the process, the service's emphasis was shifted from solely advertising to ads mixed with useful programming.
Charter also tries to incorporated photoclassified sales with spot sales. The classifieds, much like Web sites, can provide more detailed, text-oriented information that won't fit into 30-second spots.
Eigenberger calls CTV a "super niche" channel, and the operator pitches it to potential advertisers as an outlet for long-form programming with an extremely select audience. People are not watching the channel unless they are very interested in buying something, he said.
Charter runs its own classifieds with equipment from MIN, and it uses three salespeople and one producer.
Cable operators that have actively pursued photoclassified sales have learned lessons similar to those gleaned by Eigenberger.
Tracy Hartmann, regional sales manager for Cable One Inc. in Fargo, N.D., said sales for her company's photoclassifieds have been good, but because the business required a full-time production manager and a full-time salesperson, the margins have not been as high as she expected.
Over the years, the business has also had its ups and downs. At one point, when the company tried to branch out beyond real estate ads, it caused viewer confusion.
So Cable One revamped and refocused the business two years ago, renaming it the "Home Channel." It features "everything for where you live," including not only real estate, but anything associated with homes, such as information and advertising related to carpeting, fencing or repair companies.
Earlier this year, Cable One shifted the format away from static classifieds to 30-minute commercial formats (without video). It develops the ads using Apple Computer Inc. "Macintosh" work stations.
The new approach-offering fewer but longer ads-has greatly reduced management overhead for the channel, making it more profitable even if total sales are slightly lower. "We were running salespeople ragged trying to chase a virtually infinite amount of inventory," Hartmann said.
Under the old wheel format, the company was only able to sell one hour and 15 minutes of ads, which were rotated continuously over 24 hours. Such an oversupply of time made it difficult for Cable One to hold the line on pricing. "It was a waste of a channel," Hartmann said.
Breaking the sales into half-hour segments has made the ads are much more valuable to advertisers, he said. This format also makes it easier to fill the entire 24-hour day with a mixture of programming, ads and information.
Last year, Cable One-which has 40,000 subscribers in the Fargo area-took in $140,000 in revenue. This year, with the longer format, Hartmann estimated that the business will bring in $70,000, but some of the money from the previous year was converted to Internet or local spot advertising.
SCHEDULE LIKE PROGRAMMING
As Charter and Cable One have discovered, cable operators shouldn't look at their classified channels as just that. Rather, they're outlets for advertising alternatives beyond the 30-second commercial, Schifferle said.
Operators must place the classifieds on channels that are easy to find. Rather than employing a continuously rotating wheel format, operators should set up a daypart schedule much like other channels. That way, viewers can easily tune in to the programming of most interest to them.
Eigenberger and other cable operators who have cut their teeth on photoclassified are moving away from the wheel format and toward presenting ads alongside programming at set times during the day, almost in an infomercial format.
The concept of the photoclassified is fading as cable learns that trying to mimic print-media classifieds on TV is generally not very successful.
Cable operators-and especially vendors that are sensitive to the association with cheap ads for garage-sale merchandise or junk cars-don't even like to use the term "photoclassifieds" anymore. "We call it 'video publishing,'" Schifferle said.
It all ads up to creating a branded channel, much like any other channel. "What's happening now is that cable operators have more of a strategy for photoclassifieds," Schifferle said.
A sales staff dedicated to the channel also helps immensely, since spot salespeople who also handle photoclassifieds will likely neglect the new advertising form for the one they already know, she said.
Marketing the channel with a branded identity can put these advertising operations on track, she added. "Sometimes just adding marketing will greatly improve the success of the channel," Schifferle said.
Such advice covers perhaps 80 percent of what cable operators need to know. The other 20 percent comes from knowing the unique needs of one's own market. An operator in Kentucky, for instance, might want to include information about horse racing on its photoclassified channel, Schifferle said.
In some cases, knowing your market means not bothering at all with photoclassifieds.
Larry Fischer, president of Time Warner CityCable in New York, said his group considered selling photoclassifieds in 1990, but it just didn't seem worth the effort. His organization's resources were better spent developing spot advertising sales, he said.
He feels that photoclassifieds work against attempts to bolster the image of cable among advertising agencies by "cheapening" its image. Compared with spot sales, the income from photo ads was marginal, he added.
Although his company still doesn't sell photoclassifieds, Fischer said any operator that sells them should do so in conjunction with spot advertising.
While cable operators have had mixed experiences with photoclassifieds, most agreed that such advertising categories as real estate and automotive have proven to be perennial favorites.
Many MSOs noted that recruitment and employment advertising has become another big category for their business, given the current economy and the extremely low employment rates in many communities.
And despite past mixed results from photoclassified advertising, vendors in that space said things are looking up.
MIN, for example, grew 40 percent in 1999, and it anticipates 100 percent growth this year, Schifferle said. That's in sharp contrast to 1998, when its sales were flat.
Across Media Networks LCC in Golden, Colo., an outsource service for photoclassified management, said it expects to triple its 1999 revenue of $15.5 million this year.
Across Media president Dave Downey said his company also holds an ace card in the photoclassified business: It owns the patent rights to the photoadvertising process, and that patent also covers almost all interactive-television activities.
Although his company has just initiated pursuing royalty payments for its patent rights, Downey said it does not want to litigate against other photoadvertising vendors or other suppliers of interactive-television services.
But Across Media will require reasonable royalties for all activities falling into the purview of its patent holdings, he added.
Across Media has also partnered with one of the industry's biggest players. Last year, Adelphia Communications Corp. acquired a majority ownership in the company, which will centrally operate and manage the MSO's photoclassified business.
Jack Olson, vice president of media development for Adelphia Media Services, the ad-sales division of Adelphia, said his company is initiating a relaunch of its photoclassified business and it will now "aggressively" target smaller markets.
Technology from Across Media will eliminate much of the overhead burden of that MSO's original photoclassified business. It also will help Adelphia to manage its classified volume from a central point and providing better scheduling and ad-design flexibility.
In addition, Adelphia is placing the classifieds as part of a branded service called "Adelphia Community Network." That programming will include news and information of community interest, much like a small-town newspaper.
Although the service may include video, for now, it contains mostly static content, including photos, graphics and text.
The photoclassified program will also include a community Web site. Adelphia plans to roll out that portion of the initiative in the next few months.
Adelphia started its photoclassified program in its southern Florida; western New York; Erie, Pa.; and New Jersey markets, and it will roll the program out to other markets over the next year.