Comcast Provides Local Cable Ad Clout
Its Spotlight interconnects grow into a big business
Its Spotlight interconnects grow into a big business
If Comcast's advertising revenue doubles to more than $2 billion in just the next three years, as Comcast fervently hopes and many analysts expect, much of the credit will go to Charlie Thurston.
He's the head of Comcast Spotlight, the cable giant's 3,200-employee advertising-sales arm. It was his ambitious plan to create a system of standardized interconnects across the Comcast empire that would turn Comcast cable operations into local advertising powerhouses.
Thurston just might send out a thank-you card to Nielsen for rolling out its hotly contested local people meter (LPM) in the face of organized broadcast and minority opposition. The LPM's hotly debated tests in Boston, New York, Los Angeles and Chicago have tended to show cable viewing increases, particularly in the younger demos, at the expense of the big broadcasters.
Thurston is the cable ad-sales pro who came over from Adlink, the huge L.A. interconnect with leading-edge insertion technology and software, a few months before Comcast concluded its AT&T deal.
Interconnects are now up and running in 55 of the Comcast's 72 designated market areas (DMAs), more than doubling the 24 interconnects that existed before Comcast acquired AT&T's cable operation. The plan is to give ad buyers "one-stop shopping," with one tape and one invoice, in each DMA, with buys available across the same 40 networks in each major-market interconnect, so that advertisers can buy the same networks across multiple DMAs.
Comcast actively supports the Nielsen LPM rollout in the major markets, and the reason is obvious: In Boston, where Nielsen has been testing the LPM since 2002, "we've seen significant growth in cable demographic viewing and shares," Thurston says. "In turn, we've had our regional and national business growing at a clip much faster than the TV stations in Boston and much faster than most of our other interconnects."
Specifically, according to Comcast Spotlight data, during the Boston LPM's demonstration period, the 32 cable networks into which Comcast inserted commercials experienced a 23% increase in viewership in the 25-54 demographic, while the Boston Big Three network stations saw a 10% decrease in viewership. The Fox, WB and UPN affiliated stations saw a 13% decline. Since then, some of the broadcasters and their allies, both in Boston and nationally, have faulted Nielsen's LPM methodology, though that wave of complaints has subsided somewhat.
At Comcast, Thurston has deployed Adtag and Adcopy, licensed by Adlink, which allow advertisers to segment the market by sub-DMA geographic, demographic or psychographic criteria. An auto-dealer group, for example, could tag spots with different individual dealers' phone numbers and addresses in different segments of the DMA, or in English in one segment of the DMA and in Spanish in another. Or the copy in the spot itself might tout the dealer's line of pick-up trucks in one market segment and its SUVs in another.
Adtag and Adcopy are running in 23 markets, and Thurston believes that the number will increase to 29 markets by the end of the year. "All of our top-10 markets have it available," making the tag and copy technology potentially available to some 22 million cable households.
Thus far, however, "except for a couple of test markets, we're not really inserting on the digital-only networks," Thurston says. Its standardized, 40-network lineup is an "analog lineup right now," and what Comcast Spotlight is selling, including its Adtag and Adcopy abilities, is based on the analog footprint. Soon, he hastens to add, that all will be a moot point as all cable networks become transmitted digitally.
About 25% of Comcast's advertising revenue comes from national advertisers and another 25% from regional advertisers, with the balance derived mostly from local retail. The growth ahead is expected to come primarily from national and regional advertising.
In the second quarter, for example, the most recent period for which data are available, ad revenue increased 15.3% over the same quarter last year, to $330 million, according to Comcast Spotlight data. Comcast says that breaks down to a 6% quarterly increase for local and 25.4% increase for regional and national combined.
While the continued spread of LPMs throughout the top markets is likely to continue benefiting Comcast, other forces are at work with which Comcast's advertising guru also will have to contend.
For example, high-speed-data provision and video-on-demand (VOD) will become increasingly important to the MSO, and within five years fully half its video customers are expected to have time-shifting capabilities, whether through VOD or personal video recorders (PVR), according to Stephen Burke, Comcast Cable's president and chief operating officer.
Like many on Madison Avenue and Broadcast Row, Comcast's advertising-sales guru expects PVRs will impact the traditional 30-second spot commercial. No one's quite sure how, but Thurston looks ahead to the day when traditional TV spots are supplemented by, and integrated with, promotional Web sites and long-form commercials available anytime on VOD. In the future, he bets, interested consumers will be able to find long-form pharmaceutical, auto and "even political ads" via VOD.
Comcast Spotlight likes to brag that it has more interconnects than any single network has owned-and-operated stations. And it's taking aim squarely at those advertisers that want a group-wide buy. Getting national advertisers to realize that cable spot exists is frustrating. "It's just opening the eyes of the national-spot advertisers that we are a legitimate national player now," Thurston says.
Of course, the Television Bureau of Advertising, which supports broadcast advertising, regards cable as the archenemy. The TVB makes the argument that for advertisers interconnects are cumbersome and rife with complicated billing issues and that individual cable programs reach minuscule audiences compared to broadcast TV. And the TVB contends that cable is an also-ran when it comes to political advertising, and, so far in this political season, that has been true.
Thurston demurs, saying that in Comcast's interconnect markets there is in place a better traffic system, electronic billing and a single-rate card, so that "it's easier to clear most of the cable share points through one [cable] sales organization now than it is on the broadcast side."
Cable's political-season advertising shortfall is tough to take, especially because Comcast's major-market interconnects can target and segment their markets with customized sub-DMA political messages.
The problem, Thurston says, is that presidential-campaign politicos only make their ad buys once every four years and they just don't understand cable's present-day realities and capabilities: "It's an educational process," he says. "It's getting political decision makers past their vision of cable from 1988 and moving them into the year 2004. They really need to look at the ability of cable to target by network within a market or by geography, either by buying individual zones or by using Adtag and Adcopy to buy the whole market and target messages by neighborhood." He has got a couple more months to get that message across.