Researcher Sees Tough Slog for Local Cable Ads

Pike & Fischer: Canoe Ventures consortium not enough to push sector.

By B&C Staff -- Broadcasting & Cable, 9/4/2008 4:16:00 PM

Researcher Pike & Fischer doubts that the cable industry will hit its stated goal of $15 billion in local advertising anytime soon, despite its push in that sector via the Canoe Ventures consortium.

P&F estimated that local cable commercials were a $4.7 billion business in 2007 and will hit $5 billion this year for moderate growth. The Silver Spring, Md.-based researcher forecast that local cable ads will be just below $10 billion by 2015 in a new report, Cable Advanced Advertising Market Outlook.

P&F chief analyst Tim McElgunn said an unforeseen catalyst could accelerate growth at some point, but such a catalyst is not visible now. Cable-system operators have long said that local ads are a big untapped opportunity, yet it is a shrinking slice of their total revenue pie. McElgunn noted that Internet advertising emerged in recent years as a big competitor for ad dollars.

"Given the immense complexity of first creating such a platform and then using it to disrupt the existing advertising food chain, it will take years and many millions of dollars in capital spending before its impact will be sufficient to allow cable to capture more than a small percentage of total ad spending," McElgunn said in a statement.

Canoe Ventures was founded by six large cable-system operators and is led by ad-agency guru David Verklin.