Cable TV: Ads Still Held to a Higher Standard

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It's an amazing time to be in cable TV advertising. The "bad old days" — actually just a couple of years ago — are behind us. We turned the corner on that period last year, when we witnessed significantly stronger ad sales.

At the network level, we're seeing ad-supported cable channels beat all seven broadcast networks in primetime, week after week. In fact, cable had generated more than 50 percent of primetime share points through the period ended April 27 — for the second consecutive month, according to the Cabletelevision Advertising Bureau's analysis of Nielsen Media Research data. Never before has cable demonstrated that kind of pattern at this time of year.

Local ad sales are following network cable's growth. Local and spot-cable sales totaled some $3.3 billion last year, and are projected to increase by as much as 11% or 12% this year.

The signposts of cable's advertising growth are everywhere. The special attributes that allow local cable advertising to compete effectively with broadcasters are now well known on Madison Avenue. Agencies and their clients understand that:

  • Cable audiences generally purchase more products and services than broadcast-only viewers;
  • Cable advertising has the ability to reach customers with targeted programming geographically clustered around the advertiser's "trading zone";
  • Local cable offers a wide variety of local-sponsorship and community-involvement opportunities.

In summary, advertisers and their agencies understand the simple truth that investment in a growing medium is better than investment in a declining one. The playing field between cable and broadcast TV is finally becoming a level one.

ITV implications

That's the good news.

The bad news is that advertisers are now holding cable to a different and higher standard. They understand that cable TV has more to offer, and those expectations continue to grow.

It's no longer just about rating points and demographics. It's also about marketing solutions with new and dynamic applications.

Advertisers are seeking answers from cable on how best to market their products in a television world that's increasingly interactive. They want to know what additional benefits cable can provide through video-on-demand and digital video recording functionality. Clients want cable to partner with them in developing new ways to create effective advertising as television transitions into its digital era.

Our account executives are starting to be viewed as "consultants" on this road to a digital future, rather than simply as sales people.

Our predicament today recalls the Hebrew National commercials of years ago. In extolling the quality of that company's hot dogs, a heavenly voice intones, "We are held to a higher standard." I think cable TV today finds itself in a similar situation with our advertisers. We are being asked to do more, because we have always had to provide a special or added inducement for accounts to shift dollars from broadcast.

Technology has become the latest element to distinguish cable from broadcast. Cable's ability to target audiences through niche programming is cordially accepted. Our ability to reach customers through a geographic and demographic focus, which broadcast cannot match, is understood. Now, it is our ability to offer digital ad insertion and other new marketing solutions through our advanced technology that has captured Madison Avenue's attention.

So while the bar has certainly been raised, I believe the level of opportunity has increased substantially as well. We have the opportunity to:

  • Take our strength in targeting audiences and expand that to an even finer focus by using digital tiers, dedicated to the particular interests of affinity audiences, be they sports fans or Hispanic families;
  • Double our local inventory on 40 analog channels by also inserting on 40 digital networks that marry like niche programming to provide marketing solutions never before offered. Imagine pairing Style with Fine Living with Travel Channel and Biography Channel, for example;
  • Offer advertisers a "roadblock" across 20 or more channels with similar demographics as a powerful way to simultaneously aggregate audience.
  • Create rich sites on our VOD channels, much as marketers have been doing on the Internet during the past several years.

How about an automotive commercial that invites viewers who want more detail to turn to the General Motors or Ford or Chrysler On-Demand Channel, where they can find extensive information as well as tie-ins to local dealerships? Or what about the Nike Channel or the Gap Channel? It will make everyone look at home shopping in a whole new way.

Consumer control

A marketer could use a billboard ad at the beginning of a free-on-demand program to tease a product and successfully build on that, through spots placed further along in that program that lead to a longer-form commercial at the end.

Call it consumer-controlled "advertainment," if you like. Or just call it a better way to reach your customers, who are demanding a new kind of TV experience — one that they control. People just want to watch what they want to watch, when they want to watch it and not be interrupted. That consumer insight is the basis of Time Warner Cable's "Now, Anything is Possible" ad campaign, and it underlies our company's strategic business plan. It also serves as the foundation for new forms of advertising and marketing.

We're moving beyond demographics and psychographics. We're moving into an arena where time-shifted viewing, on-demand viewing and even interactive experiences while viewing are all ways to reach a customer who wants to be reached. The future is all about reaching customers, who choose to opt in, rather than about capturing the "eyeballs" of the uncommitted.

Third-party vendors are already developing software that will poll digital boxes of customers that opt-in, so consumers with similar interests can be aggregated. This agnostic approach does not interfere with privacy or seek to identify individual consumers by name or address. It simply tracks those who might tune to Spanish-language programming, sports or news and can deliver those affinity viewers in an aggregated fashion.

If you publish a newsmagazine that wants to reach news junkies, for example, this kind of segmentation of the market via digital technology is a big plus.

The "pause," "rewind" and "record" functions that are part of on-demand television do not signal the end of TV advertising. Rather, they are an entry to the beginnings of a new kind of TV advertising that is far more targeted to customers who've already indicated a likely interest in your product or service, and have even demonstrated their "ready-to-buy" inclination through various opt-in scenarios.

Imagine you are a DVR household that has opted-in for this service. While you're in the middle of viewing your favorite program, the telephone rings. You push the pause button, so as not to miss anything while on the call. What if that telephone ring was the trigger that sent a message to your in-demand TV screen — offering you the option, when you resumed viewing, to get more information on a new wireless-telephone service?

There are many details yet to be worked out, of course. But the potential for new opportunities is here. Advertisers are looking to us for guidance as to how we can help them market their products through the myriad of possibilities ushered in as television undergoes its digital transformation.

Propitious time

For those of us lucky enough to be in the local cable advertising business right now, the goal remains much the same: We need to shift dollars to local cable. Yet the tools for driving that "share shift" have never been greater and the demands on our creativity in developing new advertising models never stronger.

It's a propitious time indeed to be in the local cable advertising business. It's a new game and the people in the business today are going to write the rules, which will govern this business going forward for years to come.

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