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Cooking Up a Tastier Deal

11/07/2004 7:00 PM Eastern

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Adding Perspective to the Criticism

A Dallas fast-food chain that never spent a dime on television advertising recently discovered spot cable’s natural strengths. It’s the kind of French eatery that fits in nicely next to tony mall venues like Saks Fifth Avenue, and it has 70 restaurants sprinkled across the Southwest. When its executives told Howard Nass, a partner in media-buying firm Nass-Hitzig Media, that it couldn’t afford TV and wanted to stick with radio, Nass begged to differ.

“I explained to them that only television can give you appetite appeal,” Nass says. “Food can be brought to life on TV.” He went to a group of Dallas-area cable and broadcast networks owned by Belo Corp. and cooked up a plan.

“Belo-owned Texas Cable News agreed to produce a month-long set of cooking segments to air on our cable news channel,” says Texas Cable News president and general manager Jamie Aitken. “We then edited down these spots into a 60-second commercial for our Belo affiliate, WFAA.

“Not only did we generate revenue for Belo’s multimedia properties, but we also introduced some great cooking content for our cable news viewer,” Aitken adds. “This chain is very well known in this area, and for me to affiliate them with our on-air talent was a big win for me.”

That kind of story is becoming more common as advertisers and their agencies warm to the many benefits of local and spot cable advertising. Ad executives say they like the increasingly interconnected markets, innovative packaging and blockbuster cable programming. But not every croissant that emerges from cable’s oven is making them salivate.

Multichannel News recently sought comments from the advertising community on the good, the bad and the ugly — what they liked and didn’t like about advertising on cable systems. Many, like Nass, had glowing reports. But it’s also clear that cable still has some work to do to turn fascination into real love.

The concerns span a number of different factors, including difficulties with audience measurement, inventory constraints, higher costs, problematic efficiencies and lack of DMA data.

Audience measurement is a particular concern of Sue Johenning, executive vice president and director of local broadcast at media-buying firm Initiative Media. “We still lack the data for determining accurate local-cable audience delivery due to the many ways a local buy can be configured within a DMA,” she says.

“The set meter/diary methodology doesn’t properly capture the demographic for low-rated programs, whether on broadcast or cable,” Johenning says, although she adds, “The Local People Meter is an improvement in local cable measurement.”

Pat McNew, executive vice president of Local Media Network and director of operations at ad agency PHD USA, concurs. “Local cable sellers in smaller DMAs need to provide agencies with better information on how cable covers the market. We need full disclosure on all of the systems that it takes to deliver the entire DMA.”

“It’s difficult to purchase cable as part of a general-market buy,” says Mary Barnas, senior vice president and director of local broadcast at media buyer Carat USA Inc. She notes that the problem is compounded because “Nielsen doesn’t break cable down into the local Syscodes [as it does for local broadcast.] Hopefully, the Local People Meter will resolve this.”

That’s not the only problem bothering Barnas’s clients. She notes that some cable systems still don’t run schedules as ordered, and they limit the inventory that their national rep can sell.

“Inventory constraints at the local level are part of the reason local cable CPMs [costs per thousand] are higher than broadcast’s,” Johenning says. “Consequently, the number of markets required to break even on a CPM basis are much lower for cable than broadcast, often making national cable more attractive to advertisers.”

Part of the problem stems from the fact that cable networks only give systems a few minutes of ad avails per hour. And that’s a huge thorn for many.

“It’s the biggest issue I have,” says a local broadcast account manager at Horizon Media in New York. “One or two minutes an hour is not enough. In fact, some interconnects may only have one spot available for the whole night, because not every cable network has commercial breaks available in each hour.”

Maribeth Papuga, senior vice president and director of local broadcast at the media-buying firm Starcom MediaVest Group, says that limited avails for higher-profile networks and programs result in “price inflation.”

Some agency executives realize that’s just the nature of the cable-system beast. But there are other related issues that cable can actually do something about — like conforming to daypart standards. “Cable needs to understand that a media buy is set against a media plan,” says Kathy Crawford, president of local broadcast at the media-buying firm MindShare. “We define a primetime spot as running between 8 p.m. and 11 p.m. Spot cable might sell cable 'prime’ as between 6 p.m. and midnight. Well, that’s five day parts, not one.” Those day parts include early news, prime access, prime, late news, late fringe.

According to Crawford, cable needs “to learn how to package their programming. Interconnects have over 40 networks. They need to combine those networks and make them part of a primetime buy, because ROS [run-of-scheduling] is not happening for us.”

Some advertising executives believe that a shift in competitive forces may make cable systems more motivated to enhance their advertising propositions. McNew notes cable’s problem with consumers who have defected to satellite platforms like DirecTV Inc. and EchoStar Communications Corp.’s Dish Network.

“It would appear that as subscriber penetration and revenues flatten, the ad-sales side of the equation will become more critical and more important for the large cable operators in their overall revenue picture,” McNew speculates.

Despite all the criticism, ad buyers still find lots of positives when it comes to cable systems. “[It] can be used very effectively by delivering great frequency against a very narrow target,” McNew says. “In addition, the use of local cable sports packages and news channels are another solid way to capture a cable audience. We’ve done some terrific campaigns with New York’s News 12 and Jeep this summer, and with Adlink and the MTV Video Awards in a promotion with Dodge.”

Universal McCann executive vice president and director of operations Jean Pool says over the last decade cable systems companies have banded together in local markets to offer advertisers the kind of market coverage they’ve come to expect from broadcasting outlets. In particular, she points to the work done by the cable rep firm National Cable Communications, which is owned by three MSOs: Comcast Corp., Cox Communications Inc. and Time Warner Cable.

“They were required to turn local cable into a feasible advertising vehicle,” says Pool. “NCC was tasked to deal with electronic-data interfacing, to be a ratings source to value inventory and to educate cable MSOs that they are television and therefore must compete by daypart on a CPP [cost per point] basis. All of these issues have been addressed, and that’s why local cable is growing.”

Johenning agrees. “The increased number of interconnects with their one-stop shopping is making cable more attractive from an ease of execution and coverage basis,” she says.

McNew says that while cable systems are already benefiting from the automotive category, there are several other advertising sectors that can be more deeply tapped — among them retail, fast food and travel.

That’s one reason why Nass’s work introducing the Dallas fast food chain to local cable is particularly noteworthy.

Another success story comes from Coreen Gelber, senior vice president of local broadcast for PHD in New York. She recently test marketed broadcast and cable campaigns for a home-mortgage client. Spot cable proved the big winner. Working within the client’s limited budget parameters, Gelber placed spot buys with the Philadelphia Interconnect on CNBC, MSNBC, Home & Garden Television and TLC.

“The phones just rang off the hook,” Gelber says. In the past, the client spent about 30% of its spot budget on cable, but “they expect to increase that in 2005.”

September