As they headed toward a new year, several cable executives
issued a report card saying that key segments of the ad-sales process -- research, traffic
and billing, electronic data interchange and training -- 'need improvement.'
Executives at MSOs, interconnects, spot-cable rep firms and
networks seemed universally bullish on the growth of cable ad sales into 1998. But, by
improving in those four key sectors, some felt that cable operators could see an increase
in the profitability of ad sales, as well.
Adlink, for instance, spends heavily on custom research --
$20,000 on children's focus groups in support of Nickelodeon alone -- and on
psychographic research from Claritas/PRIZM, said Jane Piedad, the Los Angeles
interconnect's research director. Within one year of spending on the Nick focus-group
studies, she said, the interconnect had sold out its Nick avails. The Claritas research,
supporting its Adtag and Adcopy commercial-tagging refinements, has also been effective,
Adlink's various research products 'have more
than paid for themselves,' said Piedad, adding that agencies like Western
International Media and clients like Home Base, a home-improvement chain, have bought
schedules on the interconnect and will increase spending in 1998.
Looking at the industry in general, however, she thought
that much remained to be done in research, such as measuring local demographics.
Jim Birschbach, who left Tele-Communications Inc. as vice
president of ad sales in October to form Birschbach Media Sales & Marketing, said
capital investment in cable advertising, such as digital ad insertion, makes a lot of
sense, since it pays off within 24 months in virtually every market.
Birschbach, a former co-chair of the Cabletelevision
Advertising Bureau's local EDI committee, praised spot rep firms National Cable
Communications and Cable Networks Inc. for their new EDI initiatives and said such
investment will mean better inventory management and fewer discrepancies. Still, the
industry as a whole 'hasn't done enough,' he said.
'Ad-sales revenue should deliver a minimum of $50 per
subscriber by 2000,' he said, compared with $34 last year.
Joseph Ostrow, president and CEO of the CAB, agreed that
EDI will go a long way toward 'getting rid of the labor intensity' that
accompanies cable buying, while also 'maximizing the use of inventory' and
diminishing errors. Those benefits are just some of the reasons why it's
'important to put money behind the advertising function,' he noted.
Paul Woidke, vice president and director of operations at
Adlink, cited traffic and billing as another area requiring improvement if cable is to
increase its return on investment in ad sales -- or 'return on inventory,' as he
put it. Woidke said the industry's progress as far as traffic-and-billing systems
during 1997 was 'disappointing.'
Adlink has gone from inserting on six networks in an analog
environment to 24 networks digitally via 70 headends, which means 1,600 schedules a day,
Woidke said, adding that the process is far more complex than that at a
What's more, he said, cable has 'historically
underinvested in traffic systems,' even though backroom operations like his have
attained payback on such investments. On the personnel side, he emphasized that traffic
and billing must not be treated as a low-paid clerical function.
Taking that further, Bill Stanfield, president and chief
operating officer at Radius Communications and StarNet Inc., said operators must realize
the importance of training personnel in all disciplines. Stanfield said Radius has
budgeted $1 million for training in 1998 and hired a director of training.