A new report suggests cable system operators collectively will only hit $5.3 billion in local advertising sales within five years -- far below the $15 billion the industry had hoped to get.
Silver Spring, Md.- based Pike & Fischer's Broadband Advisory Services suggests it will take longer than expected for cable operators, programming networks, and advertisers to figure out exactly what new metrics and business models should be in place -- metrics that will take advantage of all the new set-top-box data.
Local cable advertising dollars will still be stuck in the muck and mire of a slow-to-recover economy -- just like that of local TV stations -- with ad revenue dropping 22% in 2009, following an 8% loss in 2008.
Pike & Fischer's chief analyst Tim McElgunn said in a release: "We believe it will be at least 2016 before U.S. cable MSOs surpass $10 billion in annual advertising revenues."
There have been signs of this slowed growth before -- including the fact that the all the cable system partners behind the industry's main local cable advertising effort, Canoe Ventures, may have different agendas for finding an industrywide-accepted addressable advertising system.
Already there have been delays with Canoe Ventures' initial efforts.
Now it appears whatever problems have been ironed out among the cable industry players, there are many more hurdles to consider, considering what TV networks, media agencies and advertisers really want.
Good news: The money is still chasing the cable addressable set-top-box dream. Big media agencies and their clients still see traditional television as the main medium for their expensive media plans.
Media executives, while acknowledging the Internet, still believe the big media money will land in the laps of those who control those viewers with set-top boxes.