By Jim Forkan Have cable operators finally started to recognize the true value of their marketing avails? It appears so, based on the past two years, as affiliates have used more of that inventory to promote their own services, such as broadband. This has forced some cable networks to shift toward paid consumer marketing to sell their newer services, especially hi-def and VOD. CTAM president and CEO Char Beales recalls that cable networks used to get lots of tune-in promo time gratis from their affiliates. Lately those avails have tightened up—so much so, Beales says, that now the programmers either must co-promote their new wares with operators or buy the time from them. Andy Addis, SVP of marketing and new products for Comcast, acknowledges that, overall, there’s been a reduction in the amount of free promo inventory made available to cable networks. "Big picture, there’s more and more pressure on limited cross-channel avails that are available for marketing," Addis says. "The number of products we’re selling is proliferating—from HD to on demand to digital, just on the video side. Then there are high-speed offerings and telephone offerings in various markets," not to mention ongoing branding efforts. Execs at Cox, Insight, Time Warner Cable and Adelphia were unavailable or unwilling to comment on the trend of networks’ buying more local cable avails. Geof Rochester, Showtime Networks’ SVP of marketing and a onetime marketing exec at Comcast, says that for the MSOs, "the [free] avails have become a lot more precious. We’re using a lot of local avails, co-branded spots using promo avails" in association with such MSOs as Comcast, Cox and Time Warner Cable. Evan Shapiro, Independent Film Channel’s SVP of network marketing, says he has bought local cable time on as many as 10 systems, including Comcast in Philadelphia, to promote IFC broadband and digital cable, but he says the buys are not related to a tightening of free avails. "We did so not because we couldn’t get it free, but because we believe in local cable [as an ad medium]," says Shapiro. Moreover, he says, local cable is the only medium in which programmers like IFC can include tags for "day, date, time and channel." Shapiro adds, "Local cable has been deemed not as valuable, but it is the most efficient, targeted and most undervalued piece of marketing real estate." A national TV buy doesn’t make sense for IFC, he says. "[But] I don’t mind purchasing local cable time. It’s an investment for us." Gold in Them Thar Avails "Operators want to use avails to make money, however that can be done," a marketing exec at a multi-network cable programmer says. That can range from booking advertisers to trying to generate subscribers for on demand, HDTV and digital upgrades, he adds. Jeff Siegel, ESPN VP of affiliate ad sales, marketing and new products, agrees: "We launched most of our newer services like ESPN HD to help the affiliates generate additional revenue and ESPN Broadband to help sell high-speed modems." In general, Siegel says, affiliates get two to three local minutes an hour from the various cable programmers. "Fifteen to 25% of that is to market local products and services," rather than to run branding spots as they used to, he adds. Although community outreach efforts remain important to ops, Siegel observes, "the affiliate focus has clearly shifted to acquisition and retention. About 99% of the [marketing] requests we get from affiliates have to do with acquisition and with upgrades," he says. "In a time of negative growth, or loss of subscriber base, acquisition marketing has become more important" for MSOs, says Mark Hotz, SVP of marketing for NBC Cable . Because IFC is a digital tier service, Shapiro says, "it’s in [IFC’s] best interest" to promote digital cable upgrades. The more digital cable households there are, he reasons, the stronger the chance IFC will be among systems’ digital offerings. "Would we love to get loads of free time [from affiliates]? Obviously, but it’s not likely," says Shapiro. Still, Shapiro says in his experience at IFC since January and before that at Court TV, he’s found that "it’s very easy to come up with a mutually beneficial program" that serves both the networks’ and the affiliates’ needs. "IFC has a vested interest in their meeting goals, because that enables us to meet our goals." ESPN’s Siegel says, "I wouldn’t say we’re getting away from affiliate marketing. We do dozens of customized campaigns every day with affiliates. But in promoting hi-def, VOD and the like, affiliate marketing has changed." Some programmers, unable to get any free local avails, have been buying time locally or on a spot-cable basis, one network exec says. Addis points out that cable networks are spending more money in consumer media beyond cable—not that that’s a bad thing. "It’s a good thing all around," he says. Discovery Networks is among those buying more local or spot cable. "We value cross-channel [promo spots]—those avails are still highly coveted," says Matt Kochan, VP of affiliate marketing for Discovery. "But, like any consumer marketer, we’re not going to put all our eggs in one basket." NBC Cable and Scripps Networks don’t put much marketing cash into ops’ coffers. "We have bought media [on local cable systems], but that’s not a primary focus for NBC," Hotz says. To advertise its on-demand content, Scripps has been mixing paid spots with free promos from MSOs’ marketing avails. Channing Dawson, Scripps Networks’ SVP of emerging media says, "We’re willing to spend some locally." Comcast launched Scripps’ on-demand service a year ago in Philadelphia. "[The operator] gave us plenty of cross-channel [avails] because that drove viewership," Dawson says. Comcast and Time Warner Cable, the first MSOs to launch Scripps’ on-demand service in fall 2002, "stepped up to support our efforts," Dawson adds. Scripps used those avails to show 30-second highlight reels of its on-demand fare. Dawson doesn’t expect Scripps’ paid marketing efforts to increase dramatically in the foreseeable future. "We buy very selectively, when it’s an important new package or something else big," he explains. One recipient of heavier paid advertising, he says, may be an upcoming VOD sweepstakes promotion. "With SVOD, we’re more involved in affiliate marketing than ever before" because of the need to educate consumers, says Showtime’s Rochester. "Together we’re doing more consumer marketing. A lot of that [trend] is due to HD." Showtime has been very active in marketing HD, he notes, along with HBO and Discovery Networks. "All our primary programming is in HD," Rochester says. A Shifting Partnership So what does the trend of affiliates selling hitherto free marketing avails to programmers say about the state of the relationships between networks and affiliates? Shapiro sees the potential for a "dramatic shift," although Addis and several programmers say there isn’t an atmosphere of contentiousness. Rochester says, "I wouldn’t characterize it [as contentious]. It’s more complementary than cannibalizing." "Our relationships with the MSOs haven’t become contentious," says Kochan. "We foresee [the relationship] evolving, but we don’t see it getting ugly." CTAM’s Beales also accentuates the positive. Despite the press coverage of disagreements between MSOs and programmers, she observes, "The real story is the tremendous marketing partnerships between MSOs and programmers already in the field around all these new services. That’s a really healthy trend."