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Attn. Advertisers: Fox News Says Forget CNN—Its Real Competition is USA and TNT

Mar 22, 2010  •  Post A Comment

By Andrew Hampp
Advertising Age

For years, Fox News’ pitch to advertisers and the press was that it was bigger and better than any other cable- news network. Now that it’s crushed that competition in ratings (if not in CPMs), the network intends to pitch itself against mainstream cable networks — and convince media buyers cable news isn’t a downscale ad buy and that its audience consists of more than Republican retirees.

Paul Rittenberg, exec VP-ad sales for Fox News Channel, Fox Business Network and Fox News Digital, said Fox’s big push to advertisers this year will be to pit its upscale audience against the more mass-reach networks like TNT and USA. "For the last six months, we’ve been trying to position ourselves as more than just direct competition with CNN; that’s over for us in a way," he said. "The general perception among media buyers, especially the 25-year-olds who don’t watch TV news anyway, is that it’s downscale. But there’s no number that doesn’t contradict that."

Part of Fox’s upfront pitch will include a slide that shows its share of 25- to 54-year-old viewers with household incomes of $100,000 or more. Among its broader competitive cable set, Fox has 26% share of cable’s gross rating points among that audience, more than History (12%), Discovery (11%) and CNN (9%).

CNN, of course, was its biggest competitor in a cable-news horse race that used to be fairly neck-and-neck among viewers 25-to-54 until Fox finally pulled ahead for good in 2009. CNN now often ranks fourth or fifth in a five-network prime-time cable news race that also includes sibling network Headline News, CNBC and MSNBC.

The growth in Fox’s ratings seems to have diversified the network’s client base beyond the older-skewing direct-response and pharmaceutical ads that still populate its airwaves. In 2009, Fox’s biggest spender in total measured ad dollars was Procter & Gamble, which spent nearly $20 million on the network, according to Kantar Media, despite a fracas over having its ads air during the controversial "Glenn Beck" program. Other top 10 spenders include Pfizer (No. 2, $9.3 million), Johnson & Johnson (No. 5, $7.6 million) and Verizon (No. 8, $6.4 million). Fox News’ overall measured ad spending in 2009 was down 0.7% from 2008, according to Kantar, to $506.5 million. (Fox referred to figures from Kagan that put Fox’s revenues at $697 million, up 4%, and higher than CNN and HLN’s combined revenues for the first time.)

Although that makes the network a mid-tier player in terms of net ad spending, it’s enough to make the network the most profitable division of News Corp., as CEO Rupert Murdoch recently told The New York Times.

But in previous years, pricing and higher cost-per-thousand-viewer rates, or CPMs, was a game CNN was winning, as Fox held out to sell more volume in its upfront negotiations. CNN continues to command a higher price for many of its programs despite ratings attrition in 2009, and it grossed $415 million in measured ad spending in 2009, according to Kantar, a 0.7% decrease from 2008. CNN has been pitching advertisers on the growth of its online video views as well as its out-of-home viewing in airports and bars, as measured by Arbitron, which helped them hold on to more ad dollars even as prime-time ratings dropped.

However, three media buyers Ad Age spoke to said Fox has started to close the CPM gap with CNN despite the latter’s multiplatform pitch.

Mr. Rittenberg admitted that Fox News has a ways to go online in terms of traffic and views — its 9 million monthly uniques trails CNN’s 33 million, according to ComScore — and will continue to push more inventory before holding out for higher pricing.
"At the end of the day, you can’t take a CPM to the bank," he said. "If an advertiser is impressed enough by our story to commit an incremental $1 million or $2 million, we’ll have succeeded."

But Fox’s higher profile among viewers and advertisers has not been easily won. The controversy inspired by Mr. Beck’s comments about President Obama last summer brought light to the potential dangers and sensitivities of program-specific and opinion-based cable news buys vs. the run-of-schedule or randomly selected cable-news-buying practice of years past. Mr. Rittenberg contends the network lost no ad revenue as a result of clients pulling their ads from Mr. Beck’s program because he was able to place their buys on other Fox shows. Only one client, Apple, announced it would no longer spend on the network altogether – "and they weren’t spending a hell of a lot of money on us anyway," Mr. Rittenberg said. The Clorox Co. also publicly said it would no longer spend on any political opinion programming.

Michael Parent, a director of national broadcast at independent media buying agency TargetCast TCM, said politics still comes up when talking to clients about buying cable news, and a network like Fox can be a tough sell at first to left-leaning clients in markets such as San Francisco and Seattle. "They understand it’s not just a bunch of right-wing coots, and that there’s left-wing people watching it to see the right-wing point of view. Just like any conservative guy I know reads The New York Times today to see what their editorial spin is."

Rino Scanzoni, who leads all media buying for WPP’s Group M agencies, said as clients are pursuing more program-specific buys on cable news, they will continue to be selective about where their ads air — whether it’s Fox and Glenn Beck or MSNBC and Keith Olbermann. "These programs tend to have a certain audience that people want to look at, not only from a ratings standpoint but from an environmental standpoint," he said. "We’re getting away from buying 12-hour rotations at the lowest cost possible and creating more of a mirror of how buys happen in the broadcast universe. Early on, that wasn’t the case, because the investment was not as significant and the programming differentials weren’t as significant."

Politically, Fox has also broadened its audience since the 2008 election as the divide between conservative and liberal-minded viewers has been bridged. A recent custom study with MRI, based on Nielsen data, found that 47% of Fox’s viewers had middle-of-the-road or undecided political views, more than CNN or MSNBC (46% each), and a 14% ratio of liberal-minded viewers (compared to CNN’s 19% and MSNBC’s 22%).
Even the Democratic Party and the Obama administration is starting to work with the network more as it finds more members of its base watching. President Obama gave a key, rare interview on health-care reform to Fox’s Bret Baier, although he accused his interviewer of interrupting him on repeated occasions.

"Having Obama do the interview with us underscores the point that our audience is extremely valuable and engaged—it’s not something you can afford to ignore," Mr. Rittenberg said. "If it’s true for the president, it’s probably true for most advertisers as well."#

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