Local Ads Remain a Hard Sell

Jun 16, 2003  •  Post A Comment

The head of one of Madison Avenue’s most influential agencies is “not that sure how important local cable advertising is to all the [cable] operators.”
Cable multiple system operators have not yet made it easy enough for advertisers to move dollars from local broadcast to local cable, said Joe Uva, president and CEO of OMD Worldwide, who made his declaration at the National Cable & Telecommunications Association’s 52nd annual National Show, held last week in Chicago, where he was on a local-cable advertising panel with Joe Abruzzese, president of advertising sales for Discovery Communications, and Charlie Thurston, Comcast’s president of advertising sales.
But Mr. Uva specifically exempted Comcast Corp., by far the industry’s largest MSO, from his general criticism of the cable industry’s local ad-sales efforts.
Mr. Thurston offered an impressive array of statistics detailing Comcast’s post-AT&T-merger actions to facilitate “one-stop shopping” capabilities for local advertisers: Comcast has built out its interconnects quickly, streamlined and standardized its back-office paperwork and is creating common-40-ad-supported-network lineups across its markets. And it is going after local print, radio and broadcast ad dollars aggressively, Mr. Thurston said.
According to Mr. Thurston, local advertising, particularly retail, comprises 54 percent of Comcast’s overall ad revenues, and so far this year it is up 4 percent; while regional business and national spot comprise 24 percent and 22 percent, respectively, of Comcast’s ad revenues. So far this year regional and national ad revenues are up 19 percent and 38 percent, respectively, Mr. Thurston said.
By this July, Comcast will have added 28 interconnects to its 71 post-merger markets and will have “53 of 54” interconnects overall, including 47 among its top 54, Mr. Thurston said.
Convincing Madison Avenue that cable is a serious local-ad player “is one of the challenges that face this industry today,” Mr. Uva said, calling for cable to invest more and improve verification and auditing capabilities by cable to prove its commitment to local ad sales.
Comcast, Mr. Thurston said, was trying to close the “ease-of-execution gap” with broadcast ad sales too.
The national advertising categories that would increase local-cable buys as a component of their broadcast buys and spend a “tremendous amount of money” tend to be “either dealership-driven, bottler-driven or franchisee-driven, and in those cases those decisions aren’t made centrally,” Mr. Uva said. “The budgets are all made locally and regionally.”
In a deregulated media world, the MSO also would consider buying radio stations in some of its markets, so that it could offer advertisers a “match-up” with MTV or other cable networks, Mr. Thurston said.
The future widespread deployment of TiVo and other personal video recorders will result in “smaller” shows’ having greater difficulty in getting launched, Mr. Abruzzese predicted, because viewers who primarily watch only prerecorded programs won’t be part of the audience flow that results in audience sampling.
Mr. Abruzzese reiterated his oft-repeated contention that cable is not getting its “fair share of the money,” despite its recent record-setting upfront. And Mr. Uva noted that despite the increase in volume, the cost-per-thousand gap with broadcast gotten larger. “The CPM gap was closing at one point for some of the higher-rated original programming in cable, down to 35 [percent or 40 percent,” he said. “Today that gap is back up to 60 percent-plus.”
The reasons include, paradoxically, broadcast’s shrinking audience, which makes its hit shows even more of a “precious commodity” and expanding cable’s increased pool of rating points, which advertisers consider an “opportunity to keep their buying efficiencies balanced. … This year everybody should be sufficiently pissed off about what happened [in the upfront],” he concluded.
The ad sales panel was moderated by Bill Burke, president and CEO, The Weather Channel Corp., and included TelevisionWeek News Editor Melissa Grego as a “panel reactor.”