Cable Ad Market Under Attack From New Media

Kagan: US. The national cable advertising market is in a state of disarray, with some cable networks reporting flat revenue in the first half and others reporting strong double digit gains.

The market is more chaotic than it has been since the advertising recession of 2001.

The bifurcation in the market is being caused by the following trends:

• Ad agencies are being pressured by clients to jump on the new media bandwagon and try something new. This has caused dollars to be siphoned from broadcast and cable campaigns into Internet advertising, video-on-demand (VOD) spots and sponsorships, and long-form ads delivered via VOD.

• Some cable network industry icons have fallen from grace, and ad buyers are no longer renewing expensive ad campaigns out of sheer inertia. This has resulted in a weaker than expected upfront market with some major buyers staying completely out of the upfront.

• The rapid growth of digital video recorders (DVRs) is causing many buyers of broadcast and cable to apply an across the board discount to spots to account for viewers fast-forwarding through commercials.

• Advertisers are looking for deep demographic data on viewership but, with many issues revolving around reporting, standards, privacy issues, etc. that have to be resolved, it's unlikely to happen on a broad basis in the near future. In the meantime, however, some advertisers are shifting money to the Web where it's easier to understand who is seeing ads and what the response rates are.

National Cable Ad Buyers Pensive Publ 20060913