Who's To Blame For Slower Local Cable Ad Growth? Apparently Everyone

Addressable advertising won't be the big saviour for cable system operators anytime soon.

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.

Paddle on.

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2 comments about "Who's To Blame For Slower Local Cable Ad Growth? Apparently Everyone ".
  1. Carter Crawford , September 21, 2009 at 12:29 p.m.

    There is another reason for slow growth that has noting to do with numbers. High frequency can work. i proved with with successful $100 a month clients, but cable sales personnel lack all the skills and tools. Cable is about programming and reaching the higher to impact on tv viewers. When you can not get the weekly programming until after the first of the month in which the client is advertising that makes it is impossible. i have seen my stategy work using the "30 06" (specified) and buckshot (ros frequency). But most sales people are too lazy to to go to the extra work of finding and ordering specified. And if CAB is giving tools to the networks they are not giving them to us buyers. When you have 65% pepentration of an area and better quality consumers, in this economy, cable should be a lock.

  2. Mike Ripley from The Columbian Publishing Company , September 21, 2009 at 5:11 p.m.

    Several larger cable systems allocated inventory away from their zones in favor of forced DMA (interconnect) buys to make buying easier for regional and national advertisers. Many of the hit prime programs were included. This took away many targeted options for smaller zoned advertisers.
    Guess what? As the economy slid, nationals and regionals preferred broadcast's or cable networks' CPP. Alienated zone advertisers found other options.
    When your system is allocated two minutes an hour per network, you can't throw half to marketing your services and split the other two avails among zone and DMA.
    With television fragmenting exponentially, no one can get frequency- once cable's unique strength.