Internet: Friend or Foe of Cable Ad Business?

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The ad-sales arena may increasingly resemble a Wrestlemania
match, as the Internet grapples with basic-cable and broadcast-television networks for
advertising and audience share. But forecasts into the early rounds of the new millennium
indicated that none will be down for the count.

Still, there's disagreement as to whether the Internet is
an enemy or an ally to cable and broadcast networks -- or a bit of both. It's pursuing the
same advertisers as TV and cable. Yet virtually all of the programmers have Web-site
companions to their programming that also add value to their network ad sales.

Asked about the Web's role, Steve Grubbs, BBDO executive
vice president, said, "That's neither friend nor foe. It's a new fact of life. It
will continue to grow. I think that the biggest fear of the networks is that people will
spend more time on the Internet than on watching TV."

Nielsen Media Research data last year, he said, showed a
"quantum drop" in TV viewership -- "something like a 15-minute drop [per
household, per week], on average, and that's huge," Grubbs added, citing the Web as a
major factor in the loss.

That trend is likely to continue. Myers Consulting Group
estimated that the 53 hours and 45 minutes of viewing time per household, per week in 2005
will encompass 48 hours for TV and the rest for the Internet and online services.

On the other hand, a study last year by BJK&E Media
Group (now TN Media Inc.) concluded that Web-heads were light TV viewers in the first
place.

In that sense, the Web "parallels magazines" as
an ideal way to reach light TV viewers, said Kent Valandara, executive vice president of
new media for Western International Media.

Relatively speaking, the Internet is still a runt, but it
is growing. The Web and online will become a "mainstream" ad medium by 2005,
Myers forecast in its "Media 2005" study. Internet/online ad spending will
skyrocket from $750 million in 1998 to $11 billion in 2005, Myers predicted, even as
Internet/online penetration soars from 20 percent to 72 percent during the same span.

"I wouldn't be surprised if we buy them at the
same time as TV or cable," said Tom Winner, director of broadcast media at Wieden
& Kennedy.

A Turner Broadcasting System Inc. spokesman said that's
already the case there.

In general, however, the Internet isn't part of the
TV/cable upfronts yet, Valandara said, adding that interested clients buy it "pretty
much when they feel like it." Rather than creating Web budgets, most accounts are
"by and large transferring [funds] from other budgets -- not necessarily from TV,
although that's the largest" part of the pie, he added.

"The effectiveness isn't there yet," Winner
said, noting that the Internet's sight and sound quality can't compare to those of TV
and cable. "On the other hand, the targeting ability is unparalleled."

The gap in effectiveness will narrow as the quality of
personal computer sight and sound improves, he added. "The Internet has very high
CPMs [cost per thousand homes] -- but no waste."

"I see it very much as friend," Joseph Ostrow,
president and CEO of the Cabletelevision Advertising Bureau, said of the Internet, in part
because "cable will be the home for most new technologies." Moreover, he said,
media planning today calls for "more of a mixture of media, which means a greater
diversity to reach prospects."

Cable networks nonetheless should not go overboard on the
Web, according to Betsy Frank, executive vice president of research and development at MTV
Networks. Online services, while increasingly aggressive in pursuit of audiences, are
unlikely to eclipse TV/cable viewing "for the foreseeable future," she said. In
the kids' market, youngsters are "very computer-savvy, but not
computer-obsessed," she cautioned.

Internet skeptics said mass marketers will still gravitate
toward broadcast and cable networks. Peggy Kelly, vice president of advertising services
at Bristol-Myers Squibb Co., said the reality is that "most brands want to be [in]
mass-media," and they add cable "to accumulate the mass audience that we can no
longer get" with network TV alone.

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