Cable, Ad Execs Tackle Issues, Answers

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Amid the sunny projections for local and national
spot-cable-sales growth at the Cabletelevision Advertising Bureau's Local Cable Sales
Management Conference in Chicago two weeks ago, there were some potential clouds on the
horizon in the form of issues raised by cable and advertising executives.

Operators paid attention because ad executives representing
three of cable's key categories voiced the concerns. One, automotive, remains cable's No.
1 category by far, CAB vice president of local sales and marketing Kevin Barry said.

The CAB's 1999 Cable TV Facts, citing Competitive
Media Reporting data, said retail ranked as cable's No. 6 category, while restaurants
(which, Barry said, is TV's No. 1 category) was No. 10 for cable.

Here is a look at some of the key points that arose during
the two-day conference:

Ratings: "There are still a number of stumbling
blocks" when it comes to considering local/spot cable, Bernstein-Rein Advertising
group planning director Katrina Motsinger said. "Ratings is one of the biggest
areas."

In response to such longtime agency complaints about poor
local ratings, CAB president Joseph Ostrow said the organization is working with the
American Association of Advertising Agencies (Four A's) to create a panel discussion on
the local-audience-ratings issue for its annual media conference, "to focus on the
need to address the inadequacy of the research that we currently have to use."

National Cable Communications CEO Tom Olson also conceded
"deficiencies in local ratings right now." Cable needs to "address the
pathetic state of local TV ratings," Olson added -- an issue discussed in late April
during the rep firm's "Targeted Television" meeting with its five MSO partners
and a half-dozen major ad agencies.

For its part, NCC plans to "move forward, hopefully
with Nielsen [Media Research], maybe with others," Olson said.

On the national level, Motsinger said, "There's no
doubt that cable is gaining strength" in audience, but she pointed out that there
nevertheless remains a considerable ratings gap between the individual TV networks and the
cable networks.

Local avails: Spot/local TV continues to far surpass cable
in ad sales, and that'll continue well into the 2000s. Spot cable is projected to top $1
billion for the first time in 2003, when spot TV will approach $14 billion, according to
NCC.

"There's a wide disparity there," NCC Midwest
regional vice president Pat Byrne said, adding that it's partly due to the broadcast
stations having so much more local inventory to sell.

That gap could be narrowed if more cable networks increase
the amount of local avails they're willing to give over to the affiliates. Bravo has just
begun offering local avails, and ESPN has announced a major increase in SportsCenter
local time come March 2000.

"The top eight or 10 networks" may well negotiate
more local inventory, Philadelphia Interconnect vice president and general manager Jim
Klunder said. Until last year, Klunder was director of local sales at Turner Network
Sales.

"That's probably a year or two away," he added,
"but it'll come at a price," presumably tied to higher programming costs.
"They're not going to give it away for nothing."

Clutter: One of the downsides to increasing avails is
increasing clutter. That's "a very critical issue" for DaimlerChrysler, senior
vice president Patrick McNew said.

Last December, the automaker's PentaCom media-buying
service did a study measuring clutter during all primetime commercial breaks on TV-network
affiliates and on six cable networks (including Cable News Network and ESPN).

PentaCom found that "the cable people were as
overcommercialized as the over-the-air broadcast stations," McNew warned.

Ford Motor Co. manager of broadcast media Mark Kaline also
expressed concern. Whatever the ratings of a particular program, he wondered, "What's
the size of the actual audience that saw my spot in a multispot pod?" Pod positions
have come to "look like a classified-ad page," he added.

Automotive consultant Larry Cummings said pod protection
was a factor in General Motors Corp.'s recent takeover of its dealers' regional media
buying.

Traffic and billing: Traffic and billing is also an issue,
Motsinger said, including getting make-good information in a timely fashion.

Olson touted NCC's installation of EDI (electronic data
interchange) at 100 of its repped systems so far this year as a major boost for spot
cable's ease of buying.

Klunder lauded spot cable's "great strides made in the
past year in EDI," as did CPM Inc. senior vice president and spot media director
Denise Beaudoin. But the latter said cable needs to continue educating the ad community on
EDI, since such technology advances have changed faster than many clients' perceptions.

Media mix: Cable generally gets into the media mix due to
its targetability and cost efficiencies, various ad executives said.

Wendy's International Inc. local-media manager Marilyn
Dennis said her company's local mix in its 206 DMAs includes broadcast stations, radio and
cable, placed via 60 agencies. The recent consolidation in radio has led to higher rates,
which, in turn, is steering many of its outlets to spending more local dollars in cable,
she added.

"We always encourage a media mix," she said.
Looking to 2000, she added, the challenge for Wendy's will be to minimize ad-spending
costs during a year when inventory will be tightened by all of the millennium, political
and Olympic Games hoopla.

Beaudoin said Ralston Purina Co. recently bought upscale
demos in spot cable for a high-end dog food to flesh out its spot and network TV and
cable, while a clothing retailer used spot cable to offset spot-TV deficiencies.

On the other hand, Motsinger said, there's a "cost
disparity between local broadcast and cable." If she had to buy all of the various
cable systems individually to cover a DMA the way a TV station would, the cost would
surpass that of spot TV, she added.

Among auto dealers, newspaper advertising has
"certainly been a fortress of spending" for decades, Kaline conceded. That,
McNew and Cummings said, goes back to the age-old notion of tangibility.

"The odds are pretty remote," Cummings explained,
that the dealer will see his spot on cable, but he will definitely see his newspaper ad.

One way in which cable is targeting newspapers is via
photo-classified-advertising channels, usually built around selling real estate and cars.

Chico, Calif.-based Multi-Image Network was at the CAB
conference to urge operators to start or expand such channels in their markets. In one
promo piece, the company said Time Warner Cable's Syracuse, N.Y., system recently
relaunched its photo channel and lifted sales by 222 percent.

The Web: The Internet is the latest addition to the media
stew, said Kaline and Cathi Weiner, director of strategic partnerships at Simon Brand
Ventures, which operates 242 shopping malls, including the Mall of America in Minneapolis.

Cummings said the Web is "an extremely cost-effective
medium," adding, "There has to be some serious integration" between cable
and the Web. That's already begun, several MSOs said.

Reworking an old saw, Kaline said, "Network TV is now
the sawed-off shotgun approach, cable's the shotgun approach and other media rifle
shot," the latter an apparent allusion to the Web.

Fragmentation: "One of the major problems is media
fragmentation," Motsinger said, noting that clients are increasingly "frustrated
by paying more and getting less."

Wal-Mart Stores Inc. -- for which she recently made a $2.5
million spot-cable buy for 1999 -- tends to use broadcast stations for its 400 stores in
"A" and "B" counties, with cable used to fill in those isolated areas
not served well by TV, she added.

Wal-Mart also uses cable to target demographics --
especially kids, teens and sports fans.

Targeting: Demographic targetability is the big factor in
cable's favor, Motsinger and Dennis said. Even as they pursue ratings parity with TV,
Beaudoin cautioned operators against forgetting their edge in targetability, which
"brought you to the prom."

Hudson Riehle, senior director of research at the National
Restaurant Association, predicted that for restaurants, "marketing will become much
more targeted" -- a possibility that operators felt should mesh well with cable's
targeting prowess.

Moreover, restaurants will run more joint promotions with
other retailers and suppliers -- for instance, in the credit-card field -- he added.

Promotion tie-ins: Kaline cautioned that tie-in promotions
with media must deliver not just traffic, but "qualified traffic" -- namely,
serious buy prospects.

An MTV: Music Television promotion may fill the showroom,
but those people may be the wrong demo, he noted. His idea of a tie-in that might work, he
said, would be a fashion show in a showroom, sponsored by the dealer and E! Entertainment
Television.

Ford dealerships for years have sponsored "race for
the [cancer] cure" footraces that "really connect with people" in many
markets, he added. Cummings preferred broad-based promotions linked with such events as
the Indianapolis 500.

Simon, which has partnered with PepsiCo Inc. on various
mall promotions, is now seeking third-party partners for an October promotion tied to Fox
Family Channel's The New Addams Family at 15 of its malls, Weiner said.

She suggested that Simon could work with cable operators on
a loyalty program, offering subscribers "mall points" based on their cable
bills.

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