Consolidation-that's the name of the new game in spot-cable ad sales at National Cable Communications.
Even though national spot sales have grown at a 40 percent clip each of the past two years, NCC believes that pace-brisk though it is-is being held back by the cumbersome spot-buying process.
CEO Tom Olson based that on feedback the spot-cable rep firm has received from the ad-agency sector.
NCC's emphasis on "targeted television," which started last year, is of interest to ad-agency media buyers, he said. "But of greater urgency is why can't [they] buy spot cable on a DMA-wide basis," Olson added.
That concern was raised again during NCC's April meeting in Chicago by a TN Media Inc. buyer. TN-one of 23 ad agencies that account for a combined 65 percent of spot cable's dollar volume- "was adamant that cable has got to get behind this," Olson noted.
"Advertisers want to use more spot cable," he said, citing NCC's recent discussions with the ad community and the "dramatic" sales growth that's been tallied in markets that have interconnected relatively recently, such as Boston and Philadelphia.
But backroom woes are cooling these accounts' ardor. That's why electronic data interface is "a hot-button issue with the agencies," Olson said. Continuing traffic and billing snags are probably holding back cable's spot-sales-growth pace, he added.
Thus, Olson told the Chicago gathering of 140 cable officials NCC was going forward with an aggressive plan to consolidate the top 50 DMAs in the near future-starting in June with Hartford, Conn., and Providence, R.I.
Those cable officials were from interconnects, MSOs and cable systems represented by NCC. The MSOs included NCC's five partners: AT & T Broadband, Comcast Corp., Cox Communications Inc., MediaOne Group Inc. and Time Warner Cable.
NCC-which hopes to expand that base into a number of additional markets this year-will offer buyers single-point insertion so they'll have to deal with only one contract and one affidavit per market.
In related moves, NCC-with its markets already well penetrated with EDI-will introduce satellite delivery of commercials to those markets.
The intent is to transform the top 50 markets from sluggish, multistop-shopping experiences to quick-response one-stop shops, much the in same way that interconnects have powered sales growth in major markets such as Los Angeles, Boston, Chicago and Detroit.
As part of the first two launches, NCC intends to install the necessary digital ad-insertion and related equipment during June, Olson said. A test phase is due early in the third quarter and actual start-up slated for the "mid- to late third quarter, he added."
There will be no major technology or interface changes required to bring about NCC's planned consolidations, Olson said, based on discussions with vendors like SeaChange International Inc., nCUBE and Channelmatic-LIMT Inc. "That's the beauty part," he added.
SeaChange and nCUBE have told NCC they can install redesigned "interconnect servers" to interface with their existing servers at the headends as the least complicated way to consolidate the given NCC-repped markets, Olson said.
NCC has already had preliminary talks with Hughes Network Systems, Video Networks Inc. and others concerning the satellite component of the plan. It hopes to select a satellite company soon, Olson said.
Satellite distribution would speed delivery of spots, but at a cost. Capital expenditures will be required, but Olson emphasized: "NCC is going to pay for it all. We're not asking the operators to pay us or to reimburse us."
As "a ballpark number," he estimated that NCC will commit "in the neighborhood of $25 million across a few years" for satellite dishes and traffic-and-billing software covering about 35 markets, as well as a master-control facility in New Jersey.
Turning to the backroom, Olson said NCC had implemented EDI in 100 markets last June-a number that has since grown considerably.
At present, 1,210 NCC-represented systems in 175 DMAs can transmit electronic affidavits to agencies, vice present of affiliate relations Steve Houck said. Of those, 65 are "100 percent EDI, meaning no paper changes hands," Olson added.
To illustrate NCC's EDI progress thus far, Houck said that in February alone, 14,000 affidavits were sent by NCC systems for reconciliation by agency buyers. About 49 percent of those were sent electronically, and the rest on paper, he noted.
Competition from an ambitious proposal for a nationwide ad-sales interconnect, which first surfaced in January, does not appear imminent. When asked about that proposal-which aimed to interconnect the top 30 DMAs-Olson said NCC has not been contacted about it.
In January, Robert Blocher-who heads a Raleigh, N.C.-based marketing firm called CableUSA Inc.-had said he was initially contacting unspecified cable networks and potential investors about his national-interconnect concept.