CTAM Summit 05: Local Cable Feasting on iTV’s Cutting Edge

Jul 25, 2005  •  Post A Comment

Local cable advertising often plays third fiddle to broadcast and cable network sales, but local systems have one distinct advantage: They are the proving ground for the next generation of interactive TV ad models.

“Local cable is the only place right now that is being technologically innovative,” said Carat Digital Executive VP Mitch Oscar, who has masterminded a number of interactive advertising deployments for clients in local cable markets.

Cable operators’ advantages are many. They have the tools to deliver ads that let viewers request more information and to “telescope,” jumping from a 30-second spot to a long-form piece of commercial content on the video-on-demand platform. In fact, the very navigation platform for accessing cable networks, and in most cases broadcast networks too, is by its nature interactive-the interactive program guide. Cablers have also deployed digital video recorders, VOD and in some cases addressable technology. That’s a lot more than broadcast and satellite can offer, Mr. Oscar said. Together these capabilities provide a nice foundation for interactive ads.

Cox and Time Warner already sell interactive ads-Cox in the Phoenix market and Time Warner in Hawaii and Albany, N.Y., for instance. Cox has said it plans to expand its interactive advertising from its Phoenix market to at least five additional systems starting this year.

What’s more, Cox introduced its FreeZone VOD platform, a portion of VOD real estate allocated for long-form commercials and branded entertainment, in San Diego in 2002, testing it there locally before rolling it out to eight more markets earlier this year. The operator now sells ads to national advertisers across all its FreeZone markets.

Comcast Spotlight has used the VOD platform as a playground for novel advertising concepts, such as its real estate on-demand section in Philadelphia that’s generating on average more than 1,000 virtual tours of Delaware Valley homes per day. Sponsored by Prudential Fox and Roach Realtors, each home tour ends with the listing agent’s information associated with that property. Thirty-second spots drive viewers to the VOD ads.

Meanwhile, Adelphia is peddling long-form ad space on its VOD platform in the new Ad Index section.

Cool New Tools

Cable operators use these cool new tech tools because they generate new revenue and boost local ad sales. For instance, Navic Networks, whose technology reaches 2.5 million cable viewers in 28 systems, said its cable operator clients have seen an increase in local ad sales revenue in excess of $10 per subscriber per year after they introduce interactivity as an option for local advertisers. Also, the renewal rate for interactive ads is about 80 percent, said Frank Anthony, Navic’s CEO.

“That’s like a 30 percent increase in revenue,” he said. “Advertisers understand they can make a much more compelling ad. They can present or create a much more engaging environment for the consumer.”

The interactive tools have been used in many ways by advertisers-to request more information, offer trivia and sweepstakes, conduct polling or link to a long-form ad. For instance, a car dealer can use an interactive ad to promote a new model, list its used car inventory, give customers a chance to request more information and provide a link to VOD content about the car.

Interactive ads work, Mr. Anthony said, because they bring the principles of direct marketing to cable advertising. “You present [viewers] with interesting offers that are tailored, and you present them with the opportunity to dive into ever-increasing levels of depth,” he said.

Cox in Phoenix has seen revenue rise since it began offering interactive capabilities more than a year ago using Navic. The operator declined to share dollar figures, but Fran Mallace, VP and general manager of Cox Media Arizona, said Cox gets a premium for its interactive ad capabilities. “When you truly look at efficiencies, that is something really special that they can’t get anyplace else,” she said. “I think we can get closer to figuring out ROI in a much more specific way.”

Last year in Phoenix, the Cox system ran an overlay on ads for furniture store Robb & Stucky linking viewers to a long-form VOD ad. The store reports it drew a 20 percent increase in traffic in 2004 compared with 2003 due in large part to the ads, said Julie Nelsen, interactive sales manager for Cox Media Arizona. That was the best increase of any Robb & Stucky store in the country, she said.

Cox has sold interactive spots in Phoenix to more than 30 local and national advertisers, such as local colleges, health care companies and local car dealers. The operator has also incorporated Navic tools into its local programming, asking viewers which high school football team they wanted to see play in the next week’s game, for instance.

In August Carat plans to fire off a second round of interactive ads for the Phoenix-area Hyundai Dealer Group. Cox will be able to report back to clients, such as Hyundai, to let them know which interactive offers, commercials, networks and dayparts worked best for their campaigns.

In Time Warner Cable’s Albany, N.Y., system, local advertisers that have used interactivity include State Farm, Upstate Ford, Direct Buy and Vanguard.

“Everyone in the 21st century is demanding to be an individual with portability, on-demand, convenience and comfort,” Mr. Oscar said. “The cable operator is technologically giving you that.”