Gimme Shelter
As this economic crisis has unfolded, we have pointed out that cable entertainment has a history of largely shrugging off recessions. People strapped for cash, after all, do the math and often discover that parking it on their couches with a remote is cheaper than going out to dinner, the movies or… just about anywhere. Of course, the big question for cable programmers is whether macro-economic strains on corporations and the corresponding drop in ad spend represents a challenge or a short-term revenue crisis.
A new article in Ad Age confirms the conventional wisdom that cable and satellite services enjoying “shelter” from economic downturns. While the article interestingly failed to address the underlying advertising issue, it made much of cable’s movement toward consolidated billing (ie, the triple- or quad-play) in helping operators pitch pay TV as a good value and thereby reduce what would otherwise be far worse churn numbers.
This argument could be taken a step further if applied to advertisers. While many major brands are considering curtailing their overall ad spending in ’09 in response to shaky economic conditions, ad-supported cable content providers could also view this an opportunity. The people advertisers want to reach will be cocooning at home. Much of that passive time (when they’re “vegging out” and most suseptible to advertising messages) will be spent in front of a TV set. With Canoe Ventures in full swing in early ’09, advertisers will be able to target specific neighborhoods (and eventually households). This could be a big opportunity for cable—both operators and programmers—to solidify share of the ad market. Recession means more of those eyeballs will be captive to the couch. Bad for people’s cardiovascular health. Good for cable and advertisers.