After a year in which spot and local cable advertising grew 20% to $6.6 billion, the top ads sales executives at the major cable operators want more commercials to sell.
"We need more time," said Billy Farina, senior VP for Cox Media, speaking on a panel on the state of the cable advertising business at the Cable Show in Chicago on Tuesday.
"They keep adding more and more national [ad] time" in shows on cable networks but there's been "no change in the amount of time we've got to sell," said David Kline, president and chief operating officer of Rainbow Advertising Sales.
While once it was hard for cable operators to unload all of their local commercial inventory, Kline said that "there's not one of us here that would say no to more inventory" on the top 30 cable networks.
"Local ad sales are becoming a more important revenue stream" for cable operators, Kline said.
Farina noted that while the two minutes of local time generated $6 billion while the 12 minutes of national time generated $24 billion. "Someone's getting a premium and I'll leave it at that," he said.
One reason driving local media is advanced advertising which ranges from interactivity that allows viewers to order more information about an advertiser using their remote control or to click to a longer form commercial with their clicker, all the way to addressable advertising, which sends different ad messages to different viewers.
To gauge the effectiveness of advanced advertising campaigns, operators and their clients must rely on set top box data from the operators themselves. For example, when media agency GroupM ran an campaign using addressable advertising that split a single avail among five different advertisers, only set-top-box data could track how many impressions each advertiser got. "There is no Nielsen rating for that," Kline said, adding that Rainbow "very shortly" will have a third party verifying its set-top box data.
With third party verification "that becomes a pretty credible product to be able to scale," Kline said.
Kline added that interactivity and addressability are good products for the industry because instead of replacing the 30-second ads clients are comfortable with, they make them more powerful. "
You're going to get rewarded with more volume and higher pricing," he said, noting that he has experienced been huge ad revenue growth over the last eight quarters. "A lot of it has to do with having these kinds of products."
Interactive advertising applications have worked particularly well for tune-in advertising, said Charlie Thurston, president of Comcast Spotlight.
In addition to tune in, the advertising executives said that health care and travel were fast-growing categories thanks to advanced advertising.
Kline added that he's seeing a lot of issue advertising money and that interactive advertising applications will be popular when the political campaigns heat up, particular when it can be used to raise money and solicit volunteers.
Thurston also talked about how the cable operators new agreement to have rep firm NCC sell local avails on satellite providers and telcos in conjunction with cable interconnects means cable ads reach many more households than they used to, making them more attractive to buyers. It is putting huge amounts of subscribers back in our business," he said. "I wouldn't want to by my sister NBC station competing with what we're going to come out with."
CAB President Sean Cunningham, who moderated the panel, noted that local sales has become so strong that new digital competitors are entering the market to compete with cable.
Joan Gillman, EVP of Time Warner Cable and president of Time Warner Cable Media Sales, says that the biggest risk posed by new competitors is that they first recruit people from cable companies. "Our challenge is to keep the talent or they're going to build their business on the back of our know-how," she said.