Does Comcast have the perfect formula for selling local ads? It sometimes seems that way when the subject comes up in conversation with programming and MSO executives. Ad sales talk, sooner rather than later, always turns to Comcast Spotlight, the company’s ad sales division. Executives at other MSOs, in particular, aren’t just impressed by Comcast Spotlight’s innovation and market savvy. They are downright jealous of the resources Spotlight has at its disposal. "Who else would you give your award to?" one LAS executive from a major MSO says. "They’ve done the most, by far." When Spotlight dabbles in VOD, it has the might of Comcast’s investment in the on-demand platform behind it. Spotlight’s interconnects are well established in Comcast’s biggest markets. But most of all, ad sales executives at other MSOs are envious of the support and autonomy Comcast president and CEO Brian Roberts and COO Steve Burke give to Spotlight. Simply put, Comcast’s HQ in Philadelphia is totally committed to Spotlight’s local ad sales efforts. "It’s been like the Edison laboratory, with new products being tested, invented and rolled out faster and faster," says Comcast Spotlight president Charlie Thurston. "The opportunity to dovetail with Comcast corporate’s new products allows us to radically change how advertisers try to target 30-second ads or three-minute long form or tie in with an Internet plan." The well-funded experiments appear to be working, as Spotlight has been reporting some of the industry’s gaudiest ad sales numbers. During a first quarter that was soft for other MSOs’ local ad sales arms, Spotlight showed 9.1% growth—this despite coming off a year that included such ad-friendly events as the Olympics and the national elections. The Spotlight Business Plan Comcast Spotlight executives rely on a triangle business plan, with the core 30-second ad business at the top and the Internet and interactive ad portions taking up the corners below. Thurston believes that tomorrow’s TV viewer will be moving seamlessly through various media, which means advertisers will have to develop more interactive messages. "We see the triangle coming to life, pushing 30-second commercial viewers into some engagement activity, either in the Internet or interactive. Once they’re there, they most likely will swap over to the other side of the triangle to complete either research on the Internet or an interactive shopping experience." Spotlight’s primary focus will continue to be on 30-second spots, which bring in 95% of its revenue. Even in this traditional realm, the ad sales division is applying technological innovations. "The ultimate place we want to go with a 30-second ad is the set-top-specific addressable ad," Thurston says. "We are testing that with OpenTV and other vendors." A year ago, Spotlight launched the targeting applications Adtag/Adcopy, which enable advertisers to divide DMAs into specific groups. In Chicago, for example, advertisers can use Adtag to subdivide a market into 40 smaller markets; they can use Adcopy to rotate different messages to those groups. The other corners of the triangle, however, put Spotlight in a league of its own. For instance, Spotlight generated about $18 million last year through an Internet partnership with Google. Spotlight also sells online classified ads and has launched The Fan, a streaming video site available to users. "We also want to be able to use The Fan for streaming and placing advertising within that context of streaming," Thurston says. Spotlight is pitching interactive ads for the on-demand platform, DVRs and on-screen program guides. It’s also selling sponsorships of unique VOD content. In Philadelphia, it’s convinced Tylenol and Jeep Cherokee to sponsor trailers for movies available via VOD. Comcast’s DVR customers will be encouraged to click to advertiser showcases via a VOD portal. Finally, Comcast’s interactive guide will run 10- or 15-second interstitial ads. Eventually, Thurston hopes to have an advertising content window that leads to a home shopping site. The Beauty of Interconnects Executives at other companies express unabashed admiration for Comcast Spotlight’s success at unifying ad markets with its interconnects. In markets where it is the dominant player, Comcast simplifies the ad-buying process by offering all advertisers the same networks and a uniform billing system. "Advertisers are more likely to buy in the same experience," Thurston says. As part of this interconnect strategy, Comcast has convinced other MSOs to swap subscribers, handing over its own subs in markets where it was not the dominant player (such as in Cleveland, where it gave subs to Time Warner Cable, and in Tucson with Cox and West Palm Beach with Adelphia). These moves are designed to address the most common advertiser complaint about spot cable: that it is too difficult to buy with way too much red tape. Assuming the Adelphia deal goes through, Spotlight’s interconnects soon will be strengthened. Adelphia has subscribers in 11 of Comcast’s top 25 DMAs (from No. 5 Boston to No. 24 Portland, Ore.). Thurston has ambitions to sell the on-demand platform to every advertiser on his client list. Nevertheless, he’s taking a go-slow approach—consumers and clients need time to catch up and understand the new technology. The slow development of interconnects has taught him the value of patience. "We do not want to make the same mistake with VOD that was made in local advertising," Thurston says. "It basically took almost two decades to get interconnects across enough of the top 100 markets that buying spot cable was becoming a fairly uniform, fairly hassle-free experience. We would like to accelerate the uniformity of the VOD experience."

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