A few progressive cable operators are putting a new face on an old idea and generating new local ad revenue in the process. Classified-type advertising has been around on some cable systems for years. Back in 1991 Cable Advertising of Metro Atlanta launched a service called The Ad Channel to 350,000 households. The price, CAMA said at the time, would be comparable to that of local print advertising. How things have changed.
With rates for newspaper classifieds soaring, cable operators large and small have been looking to start or expand their own classified services, usually in the form of a dedicated channel for real estate or employment.
Market size is no object. Equipment vendors offer technological solutions from the inexpensive to the sublime.
SusCom, a 40,000-subscriber system in Williamsport, Pa., had been running announcements for nonprofit organizations on one of its local origination channels, SusCom 2. Last year, when the local newspaper nearly doubled its ad rates, SusCom sales manager Norma Carpenter proposed to offer something different.
“We thought, `Hey, maybe there is a way to make some money here,”’ she said.
SusCom invested about $6,000 on a new computer platform to produce, schedule and telecast ads. In the first month SusCom 2 delivered $200 in new revenue. By the end of the year Ms. Carpenter was running an average of 75 to 80 clients a month and generating five times as much revenue. It’s not a huge amount, she conceded, but it’s money she never had before.
“We took something that was almost a non-source of revenue and have made it profitable,” she said.
SusCom 2 is no technological marvel, mind you. The channel offers only basic text-on-background ads-no videos, no photos. The biggest categories are services and home improvement.
“We have not even tapped auto or real estate,” Ms. Carpenter said. “I think we would have to get into photo classifieds to do that.”
Ads on SusCom run $16 for a week ($7 for nonprofit organizations). They appear on the screen for 15 seconds at a time and rotate an average of once per hour. SusCom 2 doubles as a local programming channel, so the classifieds run only about 12 hours per day.
The company does little promotion of the service, though it keeps a few fliers in its main business office and has included information in bill stuffers. SusCom classifieds do not include a Web component, although Ms. Carpenter said the company is looking at it.
“There is plenty of room for growth and to become a little more sophisticated, but we are probably doing about as well as we can with what we have to work with,” she said.
Antietam Cable, a 40,000-subscriber system in Hagerstown, Md., makes a veritable killing with photo-classified real estate ads, which make up about 20 percent of the system’s gross annual local advertising sales.
“We are doing some real estate stuff, but as far as general classifieds for jobs, boats, cars, that sort of thing, we don’t do that,” said Gene Hager, the system’s general manager.
Antietam upgraded its technology platform in 1998 at a cost of nearly $100,000, primarily to create a channel for real estate listings. Brisk sales enabled the system to recoup the investment within a year.
Buckeye CableSystem in Toledo, Ohio, launched a new classified ad service in April, tied in with a Web site (Northcoast7.com), for its system in Erie County, Ohio. Users go to the Web site, enter their own ad information, upload a photo if they wish and pay by credit card.
Buckeye charges $15 for five spots a day, or $98 for 70 ads over seven days, a price ad chief Steve Piller conceded may be a bit hefty for consumers.
“The first couple of weeks it was going really well, but it’s gotten a little soft recently. I think our pricing for the consumer is a little high,” he said.
Mr. Piller anticipates generating about $50,000 annually in new revenue from Northcoast7, an average of $2.50 for each of the systems 20,000 subscribers. That’s about 10 percent of the system’s total advertising revenue. (By contrast, if the nation’s biggest cable operator, Comcast, were to have the same level of success systemwide with a classifieds program, it could expect to generate $45 million a year in new local revenue.)
Although Buckeye Cablesystem commercial accounts can include full-motion video clips in their classified ads for an additional fee, few other cable operators offer video classifieds. It might not be long, however, before they could do so at a reasonable cost. At the rate technology is moving, interactive classifieds on cable become commonplace.
“Video is a lot more appealing to look at than black-and-white on a page. That’s one reason that TV classified advertising has an edge over the newspaper,” said Kevin Barry, VP of local ad sales at the Cabletelevision Advertising Bureau in New York. “I think when we really get it together is when there is interactive functionality available,” Mr. Barry added.
In Williamsport, the local newspaper may be having second thoughts about that big rate hike.
“The people at the newspaper have been calling our clients and asking them if they want to buy print ads,” Norma Carpenter said.
Cable operators have one great promotional advantage over broadcasters: an enormous amount of available inventory across numerous channels. Systems can also benefit from regular contact with customers via monthly bill inserts, and the ability to promote channels whenever customers call the operator with a customer service issue. Even that limited amount of marketing is having an impact at SusCom.
“If the network is down or not working for some reason, we immediately get calls to customer service,” Ms. Carpenter said.