Cable networks aim to fix soft ad market

Apr 30, 2001  •  Post A Comment

During the upfront season this spring, only about 20 cable networks are planning to throw giant bashes designed to showcase their wares and illuminate their brands.
That’s in sharp contrast to last year’s upfront, when more than 30 networks threw big parties for up to 800 of the influential and well-heeled.
But Bill Abbott, executive vice president of advertising for the Odyssey Network-soon to be the Hallmark Channel-said, “That doesn’t mean relationships aren’t still everything in this business. People are still doing their best to develop those.”
Still, there’s recession talk in the air and a general reluctance to step right up and declare that the cable advertising market will continue to grow at the heady pace that it has for the past two years.
Even all-time optimist Bill McGowan, executive vice president of advertising sales at Discovery Networks, won’t commit to that scenario. Mr. McGowan projects that basic-cable networks will sell $5.2 billion worth of ads this year, up $500 million or 11 percent from the $4.7 billion sold past year. That would be basic cable’s lowest percentage gain since the 1992-93 season, Mr. McGowan figures. But that’s still a healthy number.
Jack Myers, chief economist of the Myers Reports, says that in the last four years, cable has consistently surpassed 20 percent annual growth. This year, Mr. Myers expects cable networks’ ad sales growth to be in the 6 percent to 11 percent range, but he says the way that will be divided among the 11 or so leading cable networks and the 15 to 20 secondary cable networks is open for debate. With the market much softer, it will be harder for major cable networks to be as picky about the deals presented to them as they may have once been. “In the past few years, they could walk away from the deals that weren’t attractive,” he said.
This year, even networks such as A&E and Discovery may not have that luxury, Mr. Myers said.
Bill Cella, executive vice president, broadcast and programming for Universal McCann, agreed. “The economy has softened,” he said. “We won’t know for a few weeks what kinds of budgets we have, but it looks like a more affordable market. The past couple of years, it’s been a strong sellers’ market that hasn’t given us much time to evaluate. This year we should have more time to make better decisions about what we purchase.”
Lynn Picard, executive vice president of advertising for Lifetime Entertainment Services, doesn’t expect the total dollars spent in the upfront to be down from last year, but she does see advertisers being cautious.
“I do think that there will be some concerns from advertisers in making that long-term commitment so far in advance,” she said. But if this quarter looks better, Ms. Picard thinks things may turn around.
Discovery Networks’ Mr. McGowan thinks the softening market and the nagging writers strike may even benefit cable networks that control their own programming, driving dollars from other places. “I think many advertisers are skittish about investing dollars in programming that may not be there,” he said. “The beauty of what we have to offer is that over 95 percent of our programming is original-we own it and we control it. Regardless of a writers’ strike, we’ll be able to assure advertisers that what they’re buying is what they’ll be getting.”
All of the networks are developing strategies to overcome a slow market. One strategy that has gained favor recently is taking advantage of converging technologies to sell bundled advertising. Said Mr. McGowan, “I think that those media companies that can offer a converged product are much more recession-proof and less susceptible to economic downturns. It’s a way for advertisers to cut through the clutter and make their message stand out in a crowded marketplace, so that’s where they’re willing to spend some money.”
Joe Uva, president of Turner Entertainment Group Sales and Marketing for TBS, TNT and the Cartoon Network, says combining AOL and Time Warner has created unique opportunities so attractive that he doesn’t have to discount any prices.
“We’re really in a position to pull together and harness the right resources to reach the right target audiences in ways that have very few limitations. Whatever you can imagine, we can deliver,” Mr. Uva said.
To make such buys happen efficiently at AOL Time Warner, an ad council made up of sales leaders from all the various divisions meets regularly to coordinate multimedia sales, Mr. Uva said. A committee has been formed for the same purpose at Universal McCann.
Arlene Manos, senior vice president advertising sales for A&E Television Networks is already finding that a bundled advertising strategy works well for several of her network’s special projects. For example, she said, selling a celebrity chef’s week surrounding the showing of “The Great Gatsby” has real advertiser appeal when it involves not only the network TV special but also an article in Biography magazine and tie-ins with A&E’s Web sites.
Last year the idea of selling converged media was still new and a little unformed, Ms. Manos said. This year, both advertisers and A&E have polished the concept. “We’re getting better at it, pulling together various units, giving advertisers an opportunity to surround the project in a meaningful way, not just spreading spots all over the landscape. And advertisers are getting better at it, too. It requires attention and someone to focus on it. These things just don’t come together haphazardly, but they’re worth the effort,” she said.