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Cable Muscles in on Ad Market

Apr 20, 2008  •  Post A Comment

Cable executives have fretted in recent years about any number of factors threatening to erode their standing with media buyers, such as the arrival of commercial ratings and competition from online video. Today, it’s a different story. Buoyed by strong ratings, a wave of original programming and digital revenue streams, cable executives are feeling bold this upfront season.
One sign of their renewed confidence: More marquee-name cable channels are scheduling upfront presentations the week of May 12, traditionally the time when broadcast networks put on their dog-and-pony shows. The cable networks are competing for attention as the broadcast networks are trying to extract higher ad prices while delivering fewer ratings points.
Turner Broadcasting’s general-entertainment channels, TNT and TBS, and Disney-owned sportscaster ESPN will lay out their wares during broadcast week, while Viacom’s MTV Networks presents May 8. Many others, including the NBC Universal stable—which includes Bravo, USA and Sci Fi—have already made their pitches in the hope of getting the jump on the bigger fish and striking early deals.
On the financial front, cable is expected to do well. With scatter sales running at 20% to 30% above upfront prices, sales executives must already have an eye on their year-end bonuses. Hallmark’s Bill Abbott, executive VP for ad sales, predicts double-digit gains in cost per thousand viewers (CPM) for cable overall this upfront, and Carat’s director of national broadcast, Andy Donchin, conceded at least some money could move to cable. The Cabletelevision Advertising Bureau estimates cable networks took in $7.08 billion in last year’s upfront.
Digital continues to be the wild card for cable buyers and sellers.
“We find the agencies are still very concerned about being able to convert a digital impression into a TV impression,” said Ed Erhardt, ESPN/ABC Sports customer marketing and sales president, speaking at the recent Advertising Age cable roundtable. “What is it? What’s it worth? How do I use it?” are the questions he’s hearing media agencies ask.
Turner Broadcasting Sales President David Levy predicted the way forward will be aggregated viewing statistics that can be translated into one-stop shopping.
“If there’s a way to aggregate all those impressions and sell one package across the different platforms—and be able to post that way—you not only deliver on television but over-deliver on broadband. I think that really will be how media is bought and sold in five to 10 years,” Mr. Levy said at the roundtable.
Increasing cable’s share of the ad pie will depend on its ability not only to sell those extra TV ratings points but also to gin up excitement on the branded-entertainment front, something that has been phenomenally successful for NBC Universal’s Bravo.
Bonnie Hammer, president of NBC Cable Entertainment and previously in charge at USA and Sci Fi, said in a recent interview that from the moment a script is commissioned, the staff is already thinking of the perfect product-placement partners.
The big question mark hanging over everyone is just how badly the recession is going to affect spending overall. General Electric’s poor first quarter has already let some air out of everyone’s balloon. NBC Universal’s profit increased only 3% rather than the 5% to 10% the company had projected. That news will put NBC Universal sales executives under immense pressure to get every dollar they can in the door. TelevisionWeek has reported that sky-high scatter pricing has cooled in recent weeks.
Of course, the Cabletelevision Advertising Bureau counsels that during the past three recessions certain companies that continued to spend fared better in the long term.
To be sure, not everyone is cutting back, since advertising is often the answer to a slowdown in the sales growth of branded products.
According to a report from Sanford & Bernstein, January saw a big bump in ad spending, with Procter & Gamble responsible for most of it, increasing spending for the month by 26% or about $300 million. Brands such as Olay, Pantene and Clairol benefited.
Still, it’s hard to ignore the doom-and-gloom headlines. Ken Perkins, president of sales tracking firm Retail Metrics, explained his theory for why March retail sales were so sluggish. He told CNN, “Gas prices are at an all-time high, food prices are going up, the housing market is deteriorating, the credit market is tighter and we’ve had three straight months of job losses.”

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