Chicago— The cable industry’s ongoing problem of losing customers to DBS rivals DirecTV Inc. and EchoStar Communications Corp. is having an impact on local ad sales, executives at the Cabletelevision Advertising Bureau’s Cable Sales Management Conference said here last week.
“We have been pretty well hammered,” Mediacom Communications Corp. vice president of sales development Steve Litwer told attendees, noting that in 75% of Mediacom advertising markets, DBS has scored a 25% penetration rate, and in 15% to 20% of Mediacom advertising markets, DirecTV and EchoStar have nabbed more than 30% of multichannel homes.
The good news: Despite satellite’s gains, Mediacom managed to grow its local ad-sales business by 27% last year, Litwer said.
But Litwer also noted that local broadcasters — who receive reports from DirecTV Inc. and EchoStar’s Dish Network about the number of new customers they pick up because of their local-to-local license deals — use statistics that detail cable subscriber defections to discourage advertisers from buying local-cable spots.
Charter Media vice president of national sales and development Todd Stewart said subscriber erosion is “definitely an issue, depending upon the market.” But Cox Media Arizona vice president and general manager Fran Mallace said her company’s bundling strategy “has pretty much gotten satellite penetration to a halt.”
The panelists also discussed the issue of grabbing a bigger slice of local advertising revenue claimed by area newspapers and radio stations.
“How are we going to steal from radio, steal from newspaper?” asked Stewart, who noted that much of cable’s focus seems to be on picking up share from local broadcasters.
Cox is targeting the $1 billion spent on direct-mail and newspaper advertising in Arizona, said Mallace, adding that its goal is to be the No. 1 local biller in its markets.
Litwer said Mediacom has had success targeting a “whole group of advertisers that never [buy] radio or broadcast because they think it’s too expensive.” For advertisers that usually buy local radio over broadcast, Mediacom shows how the cost of cable advertising is comparable to radio advertising, he added.
The MSO ad-sales executives also discussed how they allocate their inventory against local, regional and national clients. All three cable executives said they are shifting more of the local avails to national spots.
“National is becoming a much bigger part of our business,” Stewart said. Charter uses 70% of its avails for local spots and 30% for national spots. But within systems that serve customers in the top 50 DMAs, 40% of the inventory goes to national spot, according to Stewart.
Litwer said that national advertising only represents about 10% of Mediacom’s advertising sales, but that the percentage of national spots Mediacom peddles is increasing.
Pointing out that cable networks usually charge advertisers cheaper rates for national units than cable operators charge for spots sold from their national spot inventory, Mallace said she would like to see operators and programmers team up to sell national clients.
“If we [operators and programmers] can get on the same page, and not have lower rates on the national side, it would help our rates,” Mallace said.