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In High Spirits

Cable is strategically positioned to top broadcast in hard-liquor profits 10/31/2004 07:00:00 PM Eastern

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From a media-planning viewpoint, network cable TV is a logical choice for brands trying to avoid certain demos or target others. But when it comes to avoiding viewers under the legal drinking age (LDA) of 21, cable networks are not created equal. MTV Networks' Comedy Central skews uncomfortably young.

The median age of Comedy Central's prime time audience during the 2003-04 season was 29.5, according to a Magna Global USA analysis of Nielsen data. While the study does not break down the composition of viewers under 21, it does note that among the major cable networks selling liquor ads, Comedy Central has the highest percentage of viewers under 18 (22%), followed by sister MTV Networks unit Spike (18%).

For the most part, cable networks dominating the liquor category fall well below the FTC's recommendation of 30% viewers under 21. That explains why youth-oriented networks like MTV didn't sell any liquor ads during 2004, but it doesn't explain why older-skewing networks like CNN, Fox News Channel and CNBC are dry.

The big beneficiaries are E! and FX with a median age of 39. Median ages aside, media buyers and network sales execs say they go to great pains to ensure that the specific programs they buy and sell skew older. Says MediaCom's Chairman Jon Mandel, "Our criteria is 85% LDA." —J.M.

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Here's a sobering fact: The amount of broadcast ad dollars devoted to spirits is dwindling, but the amount spent on cable is rising. Ever since the liquor industry's self-regulated moratorium on TV ads began eroding, cable has become the gin to their tonic.

Most telling, the uptick comes at a time when overall ad spending in the liquor industry is flat. To evade the wrath of advocacy groups and government regulators who worry about reaching underage consumers, sellers have reined in their broadcast purchases—on both TV and radio. But since TV remains the dominant media strategy for distilled brands, major media buyers prefer to buy drinks for cable viewers—and a handful of cable networks in particular. Financial considerations are one reason; reaching a targeted adult
audience is another.

"There are budget issues," says MediaCom Chairman Jon Mandel, noting that the shift to cable has less to do with public policy and more to do with the economics of distilled-spirits marketers. Broadcasters make it difficult to buy time for hard liquor; cable networks make it easy, particularly E!, FX and Bravo, which reach viewers in their 30s and 40s. "Not only does cable target better from an age point of view," notes Tom Winner, director of global media buying at Wieden + Kennedy, "but from demographic and program-environment points of view, it's easier to find suitable places for liquor ads."

Through July of this year, cable networks accounted for 44% of all ad spending by liquor-company brands, more than $19 million. That's up from 27% in 2003 and a paltry 20% in 2002, when broadcast netted $113 million.

Since then, groups that fret about the impact of TV spots on underage drinkers have pressured lawmakers to stop the practice, even though other forms of alcohol advertising—especially beer marketing—have flowed with impunity. Unlike spirits makers, beer has no NAB codes, no laws and no alcohol self-regulatory guidelines to follow.

The hard-liquor issue came to a head in 2002, when NBC pulled its Smirnoff vodka spots after three months. The commercials came with a laundry list of strict guidelines, part of an agreement NBC struck with the distiller. The so-called sobriety ads were designed to caution underage viewers against drinking irresponsibly.

At the time, the Distilled Spirits Council, a trade group representing liquor makers, claimed that NBC buckled, in part, because of pressure from the beer industry, which accounts for the majority of alcohol spots. In addition, NBC reported that both parties in Congress asked it to reconsider.

The move had a chilling effect on TV alcohol spending overall, which fell from $182 million in 2002 to $86 million in 2003 and will probably be slightly less than that in 2004. The downward spiral is credited to cutbacks in overall ad spending by the category, which went from $203 million in 2002 to $96 million in 2003 and will likely register the same in 2004.

One overarching reason: TV spots produce better results with fewer advertising dollars than print and outdoor ads. (Allied Domecq Spirits, which includes Kahlua, Stolichnaya and Malibu rum, says it will boost holiday spending by 20% over 2003, including its TV ads. But Diageo, which sells J&B, Cuervo and Tanqueray, among others, tops the list, spending nearly $26 million on advertising in the first two quarters of 2004.)

Both the cable migration and the rise of hard-liquor ads has been duly noted by the Center on Alcohol Marketing and Youth (CAMY) at Georgetown University. It recently released a study analyzing 2003 data that found a concentration of alcohol ads, particularly spirits spots, heading to cable, as well as to some youth-oriented broadcast outlets, such as The WB.

Instead of a decrease on TV, as CAMY has been urging, the study found that the volume of all alcohol ads appearing on TV actually rose 11% in 2003 to more than 289,054 units and that 23% of those spots were "more likely" to be viewed by underage viewers than by those of legal drinking age, a reality that makes broadcast TV especially vulnerable.

Although cable executives declined to discuss their liquor sales plans, one industry chief says the industry is just being pragmatic: "It's a legal product to sell, and cable is more effective than magazines ads at selling it. And we're more efficient at targeting viewers than broadcast TV." Media buyers cite another key factor that accounts for cable's growing success in the category: The industry's ability to provide critical marketing extras that heighten support from local retailers and bars distributing specific brands.

"When you do cable, you get lots of other stuff that can be important. Billboards or integrated marketing make it more akin to buying radio," says MediaCom's Mandel. For the distilled-spirits companies, that's everything, he says: "It translates into more opportunity to merchandise their brand."

Strictly Legal

Strictly Legal

From a media-planning viewpoint, network cable TV is a logical choice for brands trying to avoid certain demos or target others. But when it comes to avoiding viewers under the legal drinking age (LDA) of 21, cable networks are not created equal. MTV Networks' Comedy Central skews uncomfortably young.

The median age of Comedy Central's prime time audience during the 2003-04 season was 29.5, according to a Magna Global USA analysis of Nielsen data. While the study does not break down the composition of viewers under 21, it does note that among the major cable networks selling liquor ads, Comedy Central has the highest percentage of viewers under 18 (22%), followed by sister MTV Networks unit Spike (18%).

For the most part, cable networks dominating the liquor category fall well below the FTC's recommendation of 30% viewers under 21. That explains why youth-oriented networks like MTV didn't sell any liquor ads during 2004, but it doesn't explain why older-skewing networks like CNN, Fox News Channel and CNBC are dry.

The big beneficiaries are E! and FX with a median age of 39. Median ages aside, media buyers and network sales execs say they go to great pains to ensure that the specific programs they buy and sell skew older. Says MediaCom's Chairman Jon Mandel, "Our criteria is 85% LDA." —J.M.

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