On the Rise
Ratings, consolidation position cable for a bigger share of local ad revenue
By Kathy Haley -- Broadcasting & Cable, 11/24/2002 7:00:00 PM
Katherine Voskuil got a big surprise when she arrived at the grand opening of the Westfield Mall one recent Saturday. The marketing services manager for Charter Advertising in Saint Louis had lined up Verne Yip, the popular designer on Discovery Channel's hit show, Trading Spaces, to lend some pizzazz to the grand opening, but even she hadn't anticipated the response. Hours before Yip's scheduled arrival, a line of fans was already snaking through the mall, waiting for autographs. "He signed more than 1000 pictures that day. He even outdrew Fergie," Voskuil says, referring to Sarah Ferguson, the Duchess of York, who as the mall's celebrity spokesperson, was also on hand.
| Cable Tops in Viewership | ||
|---|---|---|
| Primetime, Mon-Sun., Sept. '01-Sept. '02 | ||
| HH Rating | HH Share | |
| Source: CAB, Nielsen |
||
| Ad-Supported Cable | 28.2 | 47.9 |
| 7-Broadcast Net Weighted Gross | 27.7 | 47.0 |
| Room to Grow | ||
|---|---|---|
| Est. 2002 Spot TV Revenue | ||
| Local | Nat'l Spot | |
| Source: CMR, TVB, NCC |
||
| Broadcast | $12.3B | $9.2B |
| Cable | $3.7B | $500M |
The big response to Yip's appearance at the mall offered a potent symbol of one of the most important trends underway in cable this year: Ratings are higher than at any time in the industry's history, and operators are capitalizing on the situation to boost their advertising businesses.
Not all of the momentum is coming from viewers. Challenged by slumping stock prices, sluggish sales of new services and increasingly virulent competition from DBS, cable operators have singled out ad sales as an important revenue stream that can be expanded quickly and with relative ease.
Signs of the trend are everywhere. Network executives report a big surge in the number of local ad sales promotions being utilized by cable systems this year (see story, page 4A). National Cable Communications, the industry's national spot rep firm, has quietly reorganized, beefing up its sales teams so they can spend more time with spot buyers and media planners and focus more effort on developing new business.
Big MSOs also show signs of a more aggressive stance: Time Warner Cable, long known for its decentralized operations, has centralized its ad sales unit and put new emphasis on large promotions that will offer advertisers grass roots marketing opportunities in several markets at once. Comcast, which will control 17 of the top 20 DMAs once its merger with AT&T is complete, also plans a more aggressive, centralized approach to ad sales marketing and promotion.
Operators building up their ad sales units do so with the wind at their backs: Primetime cable audience shares now equal or surpass, on a combined basis, the combined primetime shares of broadcast TV during much of the year. In fact, for the first time ever, cable's combined primetime viewership surpassed that of broadcast, on average, during the full TV season, from Sept. 2001 through Sept. 2002 (see chart).
Underscoring this trend will be some significant changes next year to Nielsen's reporting of local ratings. The changes will allow more cable networks to show up in local ratings books and will make it much easier for media buyers to compare cable's audiences with those of broadcast (see story, page 2A).
The opportunity cable operators face in developing their local and national spot business becomes clear after a look at the numbers. Local cable advertising revenues will probably total $3.7 billion this year, according to the Cabletelevision Advertising Bureau. This compares to an anticipated $12. 3 billion in local ad revenues this year for broadcast TV, according to the Television Bureau of Advertising. National spot revenues, meanwhile, should total $9.2 billion on the broadcast side this year, compared to about $500 million for national spot cable.
Cable's relatively small share of both local and national spot revenues appears even more stark when considered against the fact that cable networks win about half of all primetime viewing most nights. The disparity is one reason Time Warner has been moving more aggressively to expand ad revenues, says Mark Mersky, vice president of corporate sales and marketing for Time Warner Cable Advertising Sales. "Our emphasis is on the core business," he says. "The goal is to get our revenue shares up comparable to our viewing shares. There's a lot of room for growth in the core business."
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