• by Marc Krigsman , Larry Rubin , May 25, 2010

Even in the face of a continued sluggish economy and tentative consumer spending, cable advertising is experiencing good year-over-year improvement. According to Nielsen's "2009 Television Audience Report," national cable network ad spending rose 16% to $19.1 billion in 2009, while a recent J.P. Morgan survey maintains that 74% of those who buy ad spots are already spending more this year than in 2009.

Why Cable?

This trend should not come as a surprise to anybody familiar with the cable medium. Cable provides advertisers with both a tried-and-tested method for reaching their customers and a variety of niche channels that target specific demographics in a highly efficient manner.

Most importantly, cable's audience continues to grow. Nielsen data from 2009 shows that cable's prime-time household share for the year averaged 60.7 for the first time -- up 2% over 2008. In addition, since 2000, cable's share has increased every year. By contrast, broadcast network's 2009 share was down 2% since 2008.

What's Working, What's Not

There are understandably some areas that are lagging behind the trend. For example, due to a lack of new products and continued caution in consumer spending, direct-response advertising is not experiencing as significant an improvement as brand.

However, 2010 is a midterm election year, so political ad spending on cable media is heavy -- and will only get heavier as the November election approaches. According to a Wells Fargo Securities report released toward the end of 2009, political advertising in all media will hit $3.3 billion in 2010, fueled in part by the election of the entire House of Representatives -- 38 senators and 37 governors.

Alternative Platforms

Despite the increased visibility of such alternative platforms as VOD, mobile and the Internet, they are not impacting cable TV ad spending. While advertisers are testing these platforms, they are not reducing their cable TV budgets to do so.

Traditional television media continues to dominate and provide a reliable and audience-accepted advertising channel. Consumers find TV ads more persuasive, influential and engaging than ads in competitive media. Furthermore, television reaches more consumers per day -- for more time -- than newspapers, magazines, radio, the Internet and mobile media.

Tied To The Economy

The bottom line is that cable spending has historically been tied to the health of the overall economy; if the economy is in a slump, so is cable advertising. As the economy slowly improves, we are seeing this maxim applied, with advertisers cautiously optimistic and marketing budgets becoming larger and more readily available.