All Together Now7/22/2005 8:00 PM Eastern
The Cabletelevision Advertising Bureau billed its annual conference in May as an advertising-management affair. But the biggest applause during the three-day event came when an executive talked about another subject: marketing.
Charter Communications Inc. senior vice president Jim Heneghan sparked a spontaneous ovation when he pointed to a recent transformation in the employee makeup of the local cable-advertising business. “I’m happy to see so many marketing people now in cable local-ad sales,” said Heneghan. The place went crazy.
Local Gets Big
Applause for what seems like an ordinary business activity reflects a breakthrough of sorts. Long a quiet stepchild of the cable industry, the local-advertising sales function is going mainstream as the category generates big revenue contributions, gains business sophistication and increasingly collaborates with peer groups within the broader cable business.
For local ad-sales managers who are accustomed to working in the shadows of the cable industry, the higher profile is welcome.
“We’ve definitely been a little isolated,” says Joni Claerbout, a 20-year ad sales veteran who is the vice president and general manager of Comcast Spotlight in Sacramento, Calif.
But that’s changing. In 2004, Claerbout’s ad-sales team initiated a first-of-its-kind collaborative communications campaign on behalf of the California Student Aid Commission’s college-funding program, Cal Grant. Aiming to expand awareness of the program among high-school seniors, Comcast Corp. employees representing government affairs and marketing communications departments rallied around a campaign originally born from an advertising sales pitch.
Working with two California state legislators, the Comcast teams presented student workshops that helped students and parents understand how to fill out forms. They hung posters in customer-service lobbies, mailed more than 700,000 bill-insert pamphlets and talked about the grant program on “Ask Comcast,” the MSO’s public-affairs TV show, as well as in employee newsletters. They placed a Cal Grant logo and link on the comcast.net Web portal, and ran a nine-week advertising schedule featuring Cal Grant commercials and public-service announcements sponsored by two area banks.
For Claerbout, the effort was a big economic success: Comcast Spotlight captured the entirety of the Cal Grant advertising budget for the California Central Valley area, garnered supplemental ad budgets from its bank sponsors, and made a believer out of a Sacramento ad agency that had long resisted advertising on cable.
The 2004 campaign, which helped lift Cal Grant awards by 6%, was repeated again this year. But Claerbout says the program is equally notable because of the involvement of Comcast’s government affairs and cable marketing teams that historically have had little to do with cable advertising. “It wasn’t just placing an ROS schedule on the cable system like yesteryear,” she says.
That sort of crossover role is a big part of the marketing mission for Comcast Spotlight, the industry’s largest local ad-sales organization, with $1.3 billion in sales last year. “Ad sales is becoming part of the industry mix,” says Comcast Spotlight vice president of marketing and communications Vicki Lins. She is orchestrating a growing number of tie-ins between Comcast Spotlight and Comcast’s broader marketing and communications teams.
For large-scale advertising pitches to clients, she says it’s now common for Comcast Spotlight to include senior-level MSO marketing executives. Part of the reason is economic. With a stated goal of generating more than $2 billion in sponsorship and advertising revenue by 2008, Comcast executives are putting pressure on the ad-sales group to come up with new ways to grow. “It’s not going to happen just with [TV] spots,” says Lins.
Instead, Lins and other industry colleagues are looking to broader sponsorship deals that take advantage of additional cable industry assets and communications initiatives. For example, some budding partnerships being negotiated at a senior level between cable providers and consumer electronics retailers offer big opportunities for an advertising and marketing collaboration.
She is also bringing a public-affairs dimension to the ad-sales business: A new series of Comcast public service announcements promoting an appreciation of ethnic diversity include room for locally sponsored “tags.”
What’s new in these ideas is a willingness to work across industry dividing lines between advertising sales and other industry functions.
“We were a business that was kind of put to the side,” says Tom Feary, the vice president of marketing for Adelphia Media Services, the advertising-sales division of Adelphia Communications Corp. “It’s just the way we grew up.”
But the revenue contribution of cable advertising sales is now too big to ignore. During the fourth quarter of 2004, local advertising contributed an average of 6.9% to cable operations revenue among the top seven MSOs, according to quarterly financial statements. The operating cash flow contribution of advertising sales is even higher, reflecting lofty margins that the advertising business generates.
Now, Feary regularly sits in on meetings with Adelphia’s operations, marketing and public-affairs groups, brainstorming ways in which advertising-sales efforts can dovetail with other activities. “We talk about opportunities and how we can help one another,” he says.
At Cox Communications Inc., a similar integrated approach prevails among advertising-sales, public-affairs and product-marketing teams, says vice president of communications and public affairs Ellen East. Cox has even come up with an internal code word for promotional activities that unite marketing, public affairs and local ad sales teams: “lovefests.”
Those kinds of cozy collaborations were unheard of during local-cable advertising’s formative years during the 1980s and much of the 90s, when cultural differences tended to drive walls between ad sales and system operations teams. “Cable existed on Mars and ad sales was out there on Venus,” says Lins, who joined the Los Angeles-based cable advertising interconnect Adlink in 1996 after working in the mobile-telephone business. “It was a longstanding mentality.”
Part of the rift had to do with differences between the relatively workmanlike job of building and running cable systems, and the perceptions of advertising sales as a sort of slick — and lucrative — sideline. “The ad-sales people historically have had a legacy of making a lot of money and going to a lot of baseball games and dinners with clients and getting paid for it,” says Kevin Dowell, the top executive at Insight Communications Co.’s advertising sales unit, Insight Media Services.
Many cable ad sales representatives still make a lot of money. But Dowell says closer collaboration between ad-sales departments and other management teams is inevitable, and technology is one big reason. Cable’s migration to an on-demand content delivery platform has big implications for advertising, Dowell says. Whether it’s high-speed Internet content to a computer or delivery of TV shows to the living room, the emerging on-demand media “play perfectly into our world,” says Dowell.
Senior MSO executives understand it’s important to build out new platforms with a vision not just for how they will support subscription-based businesses, but how advertising may be integrated into them. For instance, Charter has reserved digital-video storage capacity within its on-demand TV service for long-form advertisements viewers can summon with the click of a remote control.
Insight is now examining ways to marry its on-demand platform with advertising, too. “Technology decisions can either make me a lot of money or shut me down,” says Dowell. Reflecting a tighter integration of ad-sales and operations functions, Dowell sits on Insight management committees devoted to the company’s high-speed Internet business and its overall video business.
Programming providers also recognize the increasing interplay between advertising sales, MSO marketing functions and new technologies. The latest affiliate ad-sales support initiative from NBC Universal Cable encompasses local advertising and support for video-on-demand offerings in one fell swoop. NBC Universal Cable in June began sending to its affiliates promotional commercials featuring career and job-hunting tips shared by CNBC personality Maria Bartiromo. The spots include a “taggable” message area that local advertisers can sponsor, and they also promote subscriber orders for the Universal Studios movie In Good Company via on-demand platforms.
NBC Universal vice president of affiliate sales Brian Hunt says the effort reflects a growing appetite among cable companies for integrated promotions that serve ad sales interests along with other business goals. “In our meetings with companies like Comcast and Time Warner Cable, they say any time we can create an integrated promotion that involves not just local ad sales but can promote any of our other products, it’s something they’re really interested in,” Hunt says.
But the biggest reason for cable local-ad sales’ more central role isn’t technology or even the shrinking of cultural differences. Instead, industry veterans say it’s a basic embrace of marketing communications as a business discipline.
Marketing? What Marketing?
For years, most local ad-sales departments worked without any sort of marketing infrastructure at all. The typical local ad sales team consisted of some combination of sales management, account executives and infrastructure operators such as local traffic-and-billing managers.
The closest thing to a marketing team most local ad-sales operations possessed was an account executive who did double-duty as a “promotions manager.” When Lins joined Adlink in the mid-1990s, she was surprised to learn she was one of the few people in the cable advertising industry with a marketing background. “I was trying to find my colleagues in the industry, and there were none,” she says.
The ranks of marketing professionals in the local cable ad-sales business began to swell in the late 1990s, partly because of the influence of Tele-Communications Inc., cable’s largest operator at the time.
Jerry Machovina, TCI’s top ad sales executive, established marketing director positions in seven regions, signifying a then-rare commitment to the marketing function within a local ad-sales environment. Most cable ad-sales groups have since added senior-level marketing positions at the headquarters level, and hired regional and field-level marketing professionals to carry out local communications campaigns. It is their presence that Charter’s Heneghan noted, much to the pleasure of the audience, at the CAB’s conference in May.
Feary, who was promoted from a regional marketing role to a corporate vice president at Adelphia, represents one of cable advertising’s new breed of marketers.
“When I first came aboard five years ago, marketing for local ad sales was basically inventing sales contests and doing promotions,” Feary says.
That’s changed. Now, Feary develops more elaborate marketing and messaging campaigns that draw from a database-marketing approach. The efforts appeal to the segmented makeup of Adelphia’s advertising base, which ranges from small, “mom and pop” retail advertisers to large, metropolitan ad agencies.
Feary recently unveiled a new overarching marketing campaign for Adelphia Media Services that uses the tag line, “It’s on target every time.” Separately, he has created for Adelphia’s agency clients a Web site (www.itsalltv.com) that attempts to dissolve perceptions that cable is somehow inferior to broadcast television. When Feary runs direct-marketing campaigns that reference the Web site, he can track market-by-market traffic to the online resource as a way to gauge the effectiveness of the campaigns.
Those tactics may be familiar terrain to modern-day marketers, but they’re relatively new to local-cable advertising. Similarly, the sort of integrated communications approach that unites marketing, promotion and public-affairs teams in an ad-sales effort has long been a staple of the over-the-air TV and radio worlds, but is only now emerging in cable ad sales. “That model has not existed in cable,” Feary says. “In our organization we’re working very hard to get there.”
Comcast Spotlight also has been a key influence in cable ad sales marketing. Its corporate marketing department includes individuals recruited from organizations outside the cable industry, including American Express Co. and the National Basketball Association.
For Lins, cable advertising’s newfound emphasis on marketing isn’t so much a breakthrough as it is an overdue realization. “When I joined Adlink people were telling me I was a visionary,” Lins recalls. “I used to say, 'I’m not a visionary. I’m a marketer. I’m a marketing person working for an ad sales organization.’”