Mixed Story for Spot

Good and bad news for cable advertising

Unlike broadcast spot, which is flat to down this year, local cable advertising continues to see double-digit growth in 2005. Or so the cable companies say.

Indeed, Comcast, Cox and National Cable Communications all deny reports of some “softening” of sales of local spot advertising to national sponsors. Bob Coen, Universal McCann senior VP, director of broadcasting, disagrees.

Local cable advertising is either sold to local merchants or, more likely, as national or regional spot buys purchased by ad agencies for their multi-market clients.

Research guru Coen projects national spot cable will see only single-digit growth in 2005 (7%), which is a decided drop from years of high double-digit increases. Coen's prediction is on the low end of other financial forecasts.

The problem is that there is no way to verify anyone's numbers. Neither CMR nor Nielsen Monitor-Plus tracks national cable spot. And the Cabletelevision Advertising Bureau, although printing charts and graphs, says it is not in the business of tracking revenue projections. This leaves only NCC—the giant cable rep firm—and individual cable operators to speak for themselves.

They say the news is good—sort of.

Andrew Capone, NCC senior VP for new business, noted a couple of months ago that, while national spot was seeing “good, solid, organic growth,” the midsize markets were performing better than the large markets. “New York and L.A. are a touch soft nationally,” he said then.

Some Caveats

But according to NCC President Greg Schaefer, Capone's concerns are no longer valid. He says national spot saw “double-digit growth for the first six months” and “more advertisers are coming to spot cable because they value that they can reach their customers in a more targeted fashion.”

Dianne Early, VP, national sales, for Cox Media, agrees. Citing double-digit growth for her company's national spot sales, Early describes automotive as up 40%, retail up 25% and financial “with a better percentage of growth then even automotive.”

A Comcast Spotlight source insists its national spot is outpacing its local cable advertising revenues, noting that, while Comcast local advertising grew 9.1% in first quarter 2005, regional/national advertising was up a whopping 15.4%.

But Jean Pool, executive VP/COO, Universal McCann, is more skeptical.

“I question that [spot] cable is outpacing broadcast television,” she says. “Now, having said that, I must say that Comcast Spotlight has done an excellent job of marketing their systems. They have also been the leader in rolling out VOD. I would expect them to have garnered a better share of the market.”

What troubles her, she says, is the high cost of buying spot cable. “Cable owners [need to be] cognizant of the marketplace pricing and compete,” Pool warns. “Today, there are many markets we cannot buy due to pricing problems.”

Universal McCann considers broadcast and cable to be the same medium. “To that end,” Pool explains, “we negotiate with cable as we do with broadcast on an equal footing.” Cable, she suggests, “could grow share by looking market to market and understanding they are television and that is the budget they are chasing.”

Cox's Early gets the message but offers a caveat of her own: “I think cable can be competitive. But it is challenging sometimes for those buys that only want to look at the top three or four cable networks and not consider all the other cable options. Instead of just wanting Lifetime to reach women, a buyer should also consider Oxygen, WE, VH1, Food or HGTV.”

That is what NCC's Schaefer says, too. “Broadcast appeals to the mass market,” he explains. “Cable can be just as efficient if it's purchased the way we suggest: 15 cable networks deep, every couple of hours each day, thus building up a media mutual fund. Too often, people try to buy just the top five, which accounts for our inefficiency. We have 50% of the audience, fractioning 50 different ways.”