MSOs at CAB Local: Maintain the Core

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Denver-Despite all of the emphasis on the Internet, interactivity and other new advertising forms, several major MSO ad-sales executives who addressed the Cabletelevision Advertising Bureau's Local Sales Management Conference here last week cautioned the industry not to shift attention away from its traditional business.

Shortly after motivational speaker Janet Lapp, the Sunday keynoter, exhorted about 900 cable executives to "Let go of your fear of the future," several MSO executives urged the audience not to forget about the past or present.

Five MSO sales executives on a panel said focusing on future advertising forms could cause operators to take their eyes off the ball.

"You can lose sight of what you're doing," Comcast Corp. senior vice president of ad sales Filemon Lopez said. "There's a danger over the next five years of getting too distracted with these bells and whistles."

While pursuing "whizbang things" for the future, Lopez stressed that cable operators must still address other issues, which range from the pricing of newer ad forms to improving local ratings measurement and fixing back-office problems.

Still, Charter Communications Inc. vice president of ad sales Wes Hart cautioned against holding back progress. "I think we ought to [adopt interactive advertising] first and figure it out later," he said, adding, "If we waited to get it right on the spot [sales] side, we would not have sold a spot yet."

Turning to Web ad sales at the local system level, Lopez said, "We [at Comcast] and others haven't been able to quite do it right" thus far.

"It's not a moneymaker at this point," AT & T Broadband senior vice president of ad sales Judi Heady added. "We're not looking at interactive as cannibalizing our business," but as attracting incremental business, she noted.

Here, too, cable operators need to take risks as they did in the early years, when, for instance, they underpriced MTV: Music Television because they were unsure how popular it would be.

Noting that he sold MTV at $300 per spot locally at the outset, Hart said, "Was it right? At the time, it was."

Today, Hart continued, cable is the only industry that can tie interactive and the Internet together. AT & T Broadband's experience with Vehix.com showed that the MSO did not get it right at first, but Vehix.com is now successfully attracting auto dealers' ad revenues.

CAB CEO Joseph Ostrow pointed out that ad revenues have soared along with cable-subscriber counts.

Still, Ostrow said, there is a lot of room for growth-from the potential of such new forms as interactive advertising, to capturing share from other media and from promotion budgets-more than $8 billion all told, he estimated. That's not to mention about $2 billion in yearly local co-op ad funds that are "left on the table, unused," he added.

And operators have yet to fully deploy digital ad-insertion equipment, he noted.

As the keynote speaker last Monday, Liberty Digital CEO Lee Masters said interactivity would have to look more like TV rather than the Web to succeed with consumers. But it will be "quite a while"-several years-before interactive draws even national advertising in a meaningful way, he predicted.

Masters was asked about the possible negative impact of personal-video-recording devices on advertising. The operators appeared unsatisfied with his response: "I don't have an answer for that one." He noted that Liberty Digital is an investor in TiVo Inc. and ReplayTV Inc.

During another session last Monday, Cox Communications Inc. vice president of ad sales Billy Farina and Rainbow Interactive director of sales Jim Hoffman wondered whether cable networks would in several years be willing to allocate Web-site avails that affiliates could sell.

Ostrow estimated the CAB Local's attendance at 900, down from about 1,000 a year ago, at least partly because of MSO consolidation. But he felt that attendance for the May 2001 conference could rise because it is scheduled to be held at a Walt Disney World hotel in Orlando, Fla.

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