Several MSOs are cautiously ramping up their efforts to sell advertising on their high-speed data services, and using their broadband capabilities to create clever video ads.
Comcast Corp. and Time Warner Cable are experimenting with and expanding the kinds of ad opportunities they offer on their portals, namely the home pages of Comcast.net and Road Runner, respectively. Pop-up ads are out, replaced by rich-media video ads. Other cable operators, such as Insight Communications Co., are getting ready to debut ads on their high-speed modem services.
“You see a lot of the MSOs investing in their portals because they believe this can evolve and grow into a relatively large business,” says Road Runner vice president of broadband programming and advertising sales Steve Cook. “What we’ve seen just over the past year is that the advertising market on our side has picked up substantially. We think there’s plenty of upside to come. As we invest more in the portal and we get people more engaged with what we’re doing, it’s a better opportunity on the advertising side.”
Comcast Spotlight, the MSO’s ad sales unit, starting June 1 began charging sponsors to place ads on Comcast.net. Previously, such Internet advertising was given to advertisers free as a bonus for running spot-cable schedules on Comcast cable systems.
“The Internet is maturing so nicely, and there are so many dollars that are coming from brand advertisers to the Internet, that we recently made a decision to actually start breaking out the cost for Comcast.net,” says Warren Schlichting, Comcast vice president of new business strategies.
“With Comcast.net, as of June 1, we charge separately for that,” he says. “I don’t know if we could have done it any earlier.”
Road Runner always has charged its advertisers, according to Cook. “Nobody gets a free lunch,” he says. “We didn’t want to devalue the real estate.”
Operators like Comcast and Time Warner argue that the subscriber bases for their high-speed Internet services are now big enough — with upscale demographics, and early-adopter profiles — to be attractive to advertisers.
Comcast.net, with 5.7 million subscribers, bills itself as the No. 1 broadband portal. Road Runner has 3.4 million subscribers.
“We’re at the point now where we’ve got enough traffic; we have enough subscribers that it’s a pretty-good sized audience for an advertiser, especially if they’re targeting specific markets — such as San Diego or Manhattan,” Cook says.
HOME PAGE CONUNDRUM
Not everyone is as upbeat about the potential ad dollars that MSOs can glean from their high-speed data services. For example, one ad-agency executive pointed out that consumers are apt to switch out an MSO’s modem-service home page for one of their own choosing.
“In some respects, what the operators are proposing sounds to me like late-’90s-style portals, and I’m not sure portals are necessarily what people want anymore — at least portals that are put together by third-parties,” says Tim Hanlon, senior vice president and director of merging contracts for Starcom MediaVest Group.
“On a good day, a Comcast or a Road Runner gets a decent percentage of people who essentially are defaulting to their start page. But over time, I see the majority of people migrating to whatever they want,” Hanlon says.
According to Cook, roughly 65% to 70% of Road Runner’s subscribers keep its portal as their home page, and 85% of its subscribers visit the portal at least twice a month.
In turn, Schlichting says that it isn’t his purview to worry about ways to keep subscribers from switching Comcast.net as their home page.
“The way Comcast is set up, it’s got the portal side — the Comcast.net side of our business — and their job is to drive traffic and keep people from switching their home page,” he says. “That’s their business. And on the ad-sales side, we really just take out whatever traffic there is and use that to push our spot business. Our No. 1 goal of selling Comcast.net is to enhance our spot sales.”
For example, Comcast has run Papa John’s Pizza chain ads that encourage viewers to visit Comcast.net, where they can interact and get more information.
“We have a lot of interesting pieces of value that we can provide marketers once they get to Comcast.net, because that audience is really a broadband audience,” Schlichting says. “That allows you to play really high-quality video. So if you wanted to create an initial spot, or you wanted to repurpose an existing 30-second spot, we’ll build and routinely do custom micro sites.”
So a banner ad on Comcast.net can direct users to an advertiser’s micro site, which can then offer a high-quality video clip with more information, according to Schlichting.
ROAD RUNNER CAUTION
Road Runner has been approaching ad sales “relatively cautiously” and avoids “littering” its home page with ads, according to Cook.
“We’ve worked with folks like BMW and BMW Films in terms of getting new types of creative, in terms of rich media,” he says. “Usually this in conjunction with some other media placement they’re doing within the company.”
Road Runner has also teamed up with Larry Fischer, Time Warner Cable president of ad sales, to explore cross-platform ad opportunities for the online service and the MSO’s spot business, according to Cook.
Last year, Road Runner launched Beepbeep.com as a clearinghouse for information on the inventory local-car dealers have in stock. There is a link off of Road Runner to Beepbeep.com, and cross-channel spots also direct car shoppers to it, Cook says.
“What we’ve noticed over time is that the money online has shifted from traditional banner-media-placement kind of advertising to more of this transactional advertising where you have to prove your worth and your value,” Cook says. “And the way you do that in the online space is by sending dealers foot-traffic into the door or [consumers] requesting quotes.”
In contrast, Schlichting is most bullish about the growth of brand ads on the Internet, and therefore Comcast.net.
“You see a lot of that brand advertising money going over to the Internet — or you see big chunks of it — because it is a much more accountable medium,” he says. “You can actually measure ROI [return on investment] in terms of requests for information.”
By the end of the year, Insight plans to sell ads on its high-speed data service. But it plans to package those with commercial spots on its cable systems.
“Our local advertisers will benefit from an Insight broadband play, but I don’t know if it has the legs to stand on its own,” says Kevin Dowell, vice president of Insight Media.
“I just don’t think that it’s an element that stands on its own like a Yahoo banner ad.”