OnScreen Summit 2011: Will 2012 Be 'Perfect Storm' For Local Ads?

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Local TV advertising is poised for a strong showing next year, with the 2012 election season driving political ad spending and advanced-advertising solutions on the rise, according to a panel of cable media sales and advertising executives at Multichannel News/B&C's OnScreen Media Summit Thursday.

"It's sort of going to be the perfect storm next year," said David Kline, president and chief operating officer of Cablevision Media Sales.

Kline said Cablevision offers full addressability across its full New York-area footprint, allowing candidates to deliver targeted messages to individual households based on different demographic criteria. He said one major politician (whom he didn't identify) used the MSO's addressable-ad platform to reach key constituents in a recent election -- and "he won, so we took the credit for it," he joked.

Added Kline, "If you want to target different groups, addressable really does help optimize your buy."

Joan Hogan Gillman, president of Time Warner Cable Media, said political advertisers -- more than those in any other category -- want to segment their advertising to unique audiences, and then to constantly revise their segmentation.

"What's different [about the 2012 election season] is the online advertising component and advanced advertising," adding that with respect to targeted ads, "The ones who figure it out will win."

Beyond political spending, Time Warner Cable has in recent months seen a recovery of its core business, including auto. Local cable ads hit a slowdown in the summer with high gas prices and government cutbacks, while some large auto dealers were low on inventory. "Local cable is the canary in the coal mine," Gillman said.

The broad and prolonged economic downturn has actually spurred some innovation in the market, as media buyers look to offer new solutions to their clients, Rentrak CEO Bill Livek said. "The ad agencies... are afraid of being disintermediated form the transaction, so they're motivated to change," he said, adding, "The only good thing about being in your 50s is you've seen three bad recessions."

Kline said advanced ads are an integrated part of Cablevision's ad operations, but he said interactive ad units and addressability ultimately help drive linear TV sales. The MSO sometimes sells advanced capabilities for a higher cost per thousand impressions (CPM) and other times for a flat fee.

"We're charging a premium for an ad to telescope, a fee to make interactivity happen on a dedicated channel," he said. "There's multiple ways to generate revenue from this, but it's more client-driven, not a cookie-cutter [offering]."

Charlie Thurston, president of Comcast Spotlight, the operator's ad-sales division, agreed that advanced advertising is an incremental revenue opportunity. "One of these products, by itself, is not a panacea that will add $50 million" to the bottom line, he said.

For TWC, advanced advertising "is in every proposal and discussion we have with a client," Gillman said. "It's not only adding value to the client, it's changing how we sell."

She said the MSO has 10 million ITV-enabled set-tops in its footprint, and on top of that in some markets is offering Internet-based coupons.

But on the advanced advertising front in general, Gillman said, "We are not flooding the market. We are very selective. You will see us scale, as we see what works and what doesn't."

Greg McCastle, head of AT&T AdWorks, said the telco is delivering interactive channels on U-verse TV on behalf of marketers including Mattel and Ford. The average interaction time with those channels is 16 minutes per session: "That's an amazing amount of time for a consumer to spend with an advertiser," he said.

A critical part of the equation is to make sure operators and inventory owners are extracting enough money for interactive and targeted ads, McCastle said. "My greatest fear is that advanced advertising becomes 'value add' that gets tacked on to deals," he said.

The panelists concurred that data, aggregated from set-top boxes, is an important piece of persuading marketers to buy into the new formats. "We actually give census-level data to clients who are buying advanced advertising," Kline said. "It gives advertisers what they want, which is the knowledge of what works and what doesn't."

Gillman said that while there is a lot of data available in the market now, "everyone is trying to figure out the, ‘So what?' ... It's not just the data, it's what you do with the data."

After an audience member who identified himself as a Cablevision subscriber who lives on Long Island told Kline he has never seen an interactive spot, Kline insisted they're running on popular networks in multiple dayparts. "We have 100 car dealers running ads, and multiple campaigns," he said. "I know they're running because we're getting leads."

Thurston then turned to Kline and quipped, "David, my 8-year-old in Rye [N.Y.] bought a car from you."

Without missing a beat, Kline replied, "Hey, a lead is a lead is a lead! A sale is a sale is a sale."

The panel, "The Important Role of Local Advertising to 2012 Revenue Goals," was moderated by B&C business editor Jon Lafayette.