Advertising: the $2 billion opportunity

Nov 18, 2002  •  Post A Comment

On the advertising side, Comcast is a growing presence in New York, where a staff of 50 executives already is aggressively catering to advertisers’ specific targeted demographics and content needs by heavily relying on a powerful network of regional cable interconnects. Comcast’s existing interconnects will generate nearly half the merged company’s $1 billion in annual ad revenues, which could double by 2005.
“It is the fastest-growing of any of our businesses,” said Steve Burke, Comcast cable president.
Already giving local TV broadcasters a run for their money, Comcast expects to be a major selling force in next year’s upfront market by building on national advertising relationships it already has-with Nike, Ford, American Express, General Motors and McDonald’s-by offering clients finely targeted national, regional and local content and viewer targets that over-the-air television and satellite cannot match.
For instance, Comcast’s ambitious co-branding opportunities allow advertisers to so finely dissect targeted subscribers they can share the back end of 30-second spots with neighborhood dealers and franchise outlets.
Such unparalleled target marketing is why Comcast has been able to command 10 percent to 50 percent premium prices in its top eight interconnect markets (such as Philadelphia, Washington, Baltimore, Detroit and Nashville). It has been able to close ad pricing gaps that persist despite cable generally outdelivering broadcasters in viewers.
Comcast will open another new advertising revenue stream when it begins to sell long-form advertising placement in its emerging video-on-demand, streaming media, home networking and video game platform services next year.
The goal is to make its advertising revenues much bigger than an 8 percent contributor to the cable company’s overall cash flow and claim for itself more than the current one-fourth of the industry’s spot TV dollars.

“Advertising is a huge opportunity. It’s only 6 percent of our business today. … We have many sources of revenue, and this will be one of the fastest-growing ones,” said Comcast President and CEO Brian Roberts.
Comcast also increasingly aggregates and sells other area cable operators’ ad time in revenue-sharing arrangements that make “spot cable buys as easy and unified a transaction as broadcast buys for advertisers,” according to Charlie Thurston, a veteran cable executive recently hired as VP of advertising.
“It’s just a matter of getting them to buy more of our markets and getting a larger share of their budgets in the markets where they already are spending,” Mr. Thurston said. “Cable’s finally turned fragmentation into a plus.”
With that in mind, Comcast also is putting more effort into selling advertisers and agencies on specific demographic groups that cut across all of its basic cable program channels. For instance, it sells male viewers, age 25 to 54, in a sports package that includes ESPN, ESPN 2, Fox, TNT, USA, Speed Vision, The Golf Channel and ESPN Classic Sports.
Such moves position the new Comcast Corp. to grab more of the $1.5 billion of traditional spot TV dollars nationally that contribute to a $25 billion national spot TV pie. Cable overall only grabs about $3.7 billion of those annual spot TV dollars, Mr. Thurston said. By pursuing advertisers vertically and horizontally, nationally and locally, in ways that cable has not before, it can give broadcasters and even print media more of a run for the money.
“This is happening at a great time. Advertisers are more receptive to these approaches than ever,” Mr. Thurston said. “They are not just listening, they are buying.”