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Friday, March, 22 2013

Cable could top $1 bil. mark in local online ads

By: Stewart Schley Friday, March, 22 2013

Local cable companies should break the $1 billion mark for online advertising revenue in 2013, and they may be poised to capture a greater share of spending as more money migrates to social and mobile platforms.

That’s the good-news view from Virginia-based local media measurement specialist Borrell Associates . EVP Kip Cassino, who developed the model Borrell uses to estimate media spending in local markets, says cable has emerged as a meaningful player in the online ad market thanks largely to an unsung asset – the customer portals cable subscribers use to manage their accounts, fetch email and, increasingly, stream video content.

The not-so-good news: Cable has a long way to go. The $919 million in market-directed online ad spending captured by cable companies last year made up just 1.4% of a roughly $67 billion market, according to Borrell’s estimates. That compares to just under 9% for newspapers and 6% for local TV stations, categories that put increasing resources into local news and information websites. Here's Borrell's 2012 spending estimates by category:

Source: Borrell Associates, 2013

The kings of localized online advertising are “pure play” web publishers like Google that vacuum up an estimated 70% of the online spending directed to specific markets. But even after backing out the $47 billion in pure-play spending, cable accounted for just 4.7% of online spending, with newspapers (30.5%), TV broadcasters (20.4%) and directory publishers (18.1%) commanding far bigger shares.

Cassino, one of the few researchers who tracks local cable ad revenue, thinks the industry can do better, and probably will. “Cable has been kind of passive on this for a while,” he said in a recent interview. “But now they’re getting more aggressive.”

The main focus is customer landing pages like Comcast’s or Cox Communications’ customer portals. “What’s interesting is that the cable provider is often the home page for a surprisingly large number of people who are online,” says Cassino.

But in addition to this ready-made real estate, some operators are expanding to offer online ad placement across additional third-party sites. Time Warner Cable Media is probably the most advanced in this category with a syndicated network of web sites it has assembled and makes available for localized ad placement. Joan Gillman, President of TWC Media, makes the point that selling localized ad space on independent web sites is similar to cable advertising’s bread-and-butter business of selling inventory on TV networks provided by outside content distributors like Turner Broadcasting or FOX Cable Networks. “We can apply the same principles to popular publisher sites on the Internet,” she told us recently.

Those efforts should help elevate the industry’s revenue contribution from online. So should an invigorated effort from cable rep firm NCC Media to bring more attention to cable’s portals, which draw larger audiences than newspaper and TV station sites in some markets, as we recently wrote .

A more influential driver, though, is likely to be a looming inflection point in online advertising at large. As more Internet usage flows through social networks and mobile devices, advertising sellers that have reach and presence in these markets will benefit, says Cassino. He puts cable in that camp, noting that cable companies provide video, online and voice services that position them to integrate advertising across devices. Another bonus: Cassino sees more dollars flowing to promotional marketing than traditional display advertising online. That too could be good for cable, which like the radio business has a long history of integrating local-market promotions into ad campaigns.


NCC Media puts spotlight on cable’s web portals (Jan. 22, 2013)

Portal potential: There’s big business in cable’s customer websites (July 2, 2011)

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