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An Undervalued Market for TV

Oct 11, 2004  •  Post A Comment

By Sheree R. Curry

Special to TelevisionWeek

Nashville’s 48-county designated market area relies heavily on local advertising because it hasn’t been able to lure national advertisers to spend much more per household in this No. 30 DMA than they do in smaller markets, such as Milwaukee, Las Vegas and Austin, Texas.

Advertisers spend about $124 per household in this city, where about 60 percent of ad revenue is locally derived, according to data compiled by BIA Financial Network and TNS Media/CMR. Compare that spending with similarly ranked Milwaukee (DMA No. 33), where advertisers spend about $194 per household, or far lower-ranked Las Vegas (DMA No. 51) with $303.

“National advertisers don’t see this as a valuable market,” said Dave Carter, area VP and general manager for Comcast Spotlight, Nashville, which sells 98 percent of the market’s cable homes through the 2001-established interconnect. “The broadcasters [in Nashville] undervalue their product, so they sell it inexpensively. As a result, the market doesn’t index well.”

Nashville, with a mere 4.4 percent unemployment rate spread across a 904,000-TV-household population, indexes a 68 in advertiser spending per household, while Las Vegas comes in at 167. The median is 100.

Despite the low cost per thousand, advertising on the three major TV networks still remains out of reach for many local advertisers. That’s good news for cable, which doesn’t see ABC, CBS or NBC as competitors at this level. The Sinclair Broadcast-operated triopoly of Fox affiliate WZTV, WNAB-TV (The WB) and WUXP-TV (UPN), with its high percentage of syndication, is a fierce competitor on the local level, however.

“Our focus has been not only to garner a share of television dollars but to look at the strength of our product and tackle specifically radio and newspaper and outdoor money,” Mr. Carter said. “We see our biggest competitor overall being The Tennessean [newspaper]. They do $110 million [in ad revenue], about as much as the TV stations collectively.”

Nontelevision media capture about 50 percent of the $300 million in total media spending, with the bulk of that going to newspaper, according to TNS Media/CMR.

“When we go talk to an individual restaurant market with one store in a particular part of town, their advertising may only be in a local paper,” Mr. Carter said. “We need to know how we can customize our product to suit their needs.”

Using data from Paper Trends, Comcast will estimate what the client is spending in its print advertising and then recommend to the client how to redesign and reposition the print advertising to save money, while still maintaining a decent amount of exposure. Comcast will then help the client put those savings into cable television advertising.

“We are not looking to pull them out of the paper. Everything we are trying to do is solution-oriented and justifiable,” Mr. Carter said.

Cable’s ad revenue will be up 25 percent this year over 2003, he said, while total media revenue is on track to be up 10 percent. He expects about 10 percent cable growth next year.

Jamie Dunham, executive VP of Bohan Advertising/Marketing, Nashville, said she buys cable for her clients, such as HCA Hospitals, because of Comcast’s ability to target specific customers geographically and through certain networks, but also because of the platform’s flexibility.

“Comcast has worked with us to put together three-minute segments. It would be way too expensive to do that on broadcast,” she said.

Mr. Carter said much of Comcast Spotlight’s success is due to the hard work of Area Marketing Director Leigh Farrow, whom he hired away from Hardee’s at the end of 2000. “We do a lot of customized promotions,” Mr. Carter said, “and Leigh brings in a certain knowledge, especially in QSRs-quick service restaurants.”

One promotion led by Ms. Farrow partnered 60 local Hardee’s restaurants with the Tunica Convention and Visitors Bureau, a regional advertiser promoting the casinos of Tunica, a northern Mississippi town.

Hardee’s was a good partner because its demographics mirror those of the casinos, Mr. Carter said. It is primarily blue-collar, and it skews to a 35-plus crowd, not being as child-oriented as McDonald’s. The register-to-win contest offered the winner a three-day expense-paid trip to Tunica.

“Since 70 percent of Hardee’s business is by drive-through, Leigh had the foresight to put see-through plastic covers on the ordering box that said `Register to win a weekend trip to Tunica when you get to the window.’ At the window there was a tear-off pad. In a period of less than 10 weeks we had over 10,000 entries,” Mr. Carter said.