Understanding the Options in Local TV

Feb 12, 2007  •  Post A Comment

By Adam Armbruster
Special to TelevisionWeek

When clients say they tried TV in the past and it didn’t work, we always ask, “What type of TV did you use? Was it local cable insertion or was it local broadcast affiliate television?”

It’s critical that we understand the options they chose and why they chose them before we can do a post-mortem on the old TV campaign. Only then can we begin to build a new and successful one.

Most new local or regional advertisers do not understand the implication of the type of television they choose. They often do not understand the cost efficiencies of each, or the very way to employ the inherent advantages of both cable and local broadcast television.

I imagine that it is easy to gloss over these details when you are excited about your first campaign; however, the responsibility is on the television industry to educate clients about the best options so that they have a positive experience.

Clients we see as a fit for local cable television, assuming a mid-sized market (No. 50 to No. 75), include very small businesses, such as those with under $100,000 in annual sales with small annual ad budgets, or micro-targeted businesses with no need for general awareness in the market or other very specific niche retailers, such as an exotic car repair center.

Local cable television advertising was designed for local targeting, not for cost efficiency. As was the Internet, cable was created to serve micro-audiences and does that quite well. For example: Cooks watch the Food Channel; hard-core golfers enjoy the Golf Channel. But trying to reach local golfers with the Food Channel would be a waste of money.

With this in mind, does it make sense to try to reach the broad general population with small-audience niche programming? It does not.

Cable is a good way to translate a very small local ad budget from local print or local outdoor to a medium that it much more dynamic. But to lead a client to expect a massive surge in response from the small, micro-targeted ad-insertion cable audiences is just not fair to the client.

Case in point: In most television markets, the audience for ad-insertion cable networks do not register even 1,000 viewers each over specific time periods. For an auto dealer to expect immediate return from an audience of 1,000 viewers is to ignore the fact that only 1 percent of those in the audience are actually in the market to buy a new car, a new home or new furniture. Reaching car buyers market-wide 10 at a time is simply not a cost-efficient way to market on television.

Broadcast television, used properly with careful program selection, is an extremely cost-efficient way to target mass audiences with a focus on specific types of consumers.

Just as with cable, dollars can also be easily wasted when the advertisers use broadcast at the wrong times, or on the wrong days. Clear buying windows have been established and there are now predictable patterns for all types of retail, auto, home and furniture buyers. If you now know where and when these buyers are watching television, you can eliminate any possible wasted spending in advance.

Analyze the Cost

So if you are an automotive advertiser, when you reach an audience of 100,000 in a broadcast television program, and then factor in that 1 percent of those folks are actual buyers, you now have an audience of 1,000 auto buyers; that is why local broadcast television is so cost efficient. That being said, micro-businesses serving very small, local consumers, should think carefully about choosing between cable or broadcast television to be sure that they can handle the level of response broadcast television will bring them.

Local ad-insertion cable television is often regarded by advertisers as being “cheaper” than local broadcast television. Yet when we analyze the numbers, we see the cost per thousand of the actual audience is in the $100 to $200 range, compared to local broadcast, in which the CPM ranges from $5 to $20. So if the cable CPM is much more expensive, why do advertisers believe it costs less? Was it learned through actual research or via a pitch by a sales representative or advertising agency?

The appropriate categories for broadcast television include most domestic and imported auto dealers, furniture stores, banks, credit unions, regional hospitals, home contractors and any type of chain business serving a moderate-size sales region.

Cable is correct for micro-businesses in small, fixed sales regions or for niche businesses that have no appeal for the general marketplace. It is not to say that the general marketplace does not watch some cable television, but placing a message that only appeals to a small fraction of 1 percent of the region is a slow and expensive way to tell your story.

Another factor must be included in your planning, and that is the length of your actual campaign. If yours is a very long-term flight (one to two years), then the slow aggregate of audience size using cable will be effective. However, if your goal is for immediate payoff from spending in television (by immediate we mean one to two months), then you will need to find a way to tell your story to as many potential buyers as quickly as possible and for the least amount of money. Here the cost efficiencies of local broadcast television-and for advanced marketers, the local broadcast television station’s Web site as well-become your advantage.

We do not believe that there is a right or wrong choice between local affiliate broadcast television or local ad-insertion cable television, just good or poor cost efficiency based on the real goal of your business during your television campaign.

When I was a youngster in business, my grandfather taught me that only when we know the numbers do we know the value of a business opportunity.

So this year, look for the real numbers of local ad-insertion cable and broadcast before you make a decision about local television advertising.

Your 2007 business profitability hinges on your decision.

Adam Armbruster is a partner in the Red Bank, N.J.-based retail and broadcasting consulting firm Eckstein, Summers, Armbruster and Co. He can be reached at adam@esacompany.com or 941-928-7192.