When it comes to the fight for ad dollars, everyone fears the worst and has dug in (The current economic crisis doesn’t help… Ford sales down 34%? The next upfront season could be brutal and more competitive than ever!). But a new study by Sterling Market Intelligence is quite intriguing, as it posits that national advertisers are rabidly interested in local online advertising—and relatively frustrated with their current options. This sounds like opportunity knocking for cable ops and programmers, which have seldom worked together on local advertising.
Think about the convergence of factors: Canoe Ventures ramping up next year with TV ads targeted to the neighborhood and eventually to the household; premium online content sites like Hulu, Joost and even some MSO-sponsored portal sites starting to gain audiences and slowly re-acclimating the YouTube-addicted public to ad-supported Web video; an explosion of home networking technology that increasingly blurs the lines between TVs and PCs when it comes to streaming media.
All of these things together spell big opportunity for MSOs, with local ties and a billing relationship with millions of customers, and programmers, which have longstanding relationships with national advertisers. Sure, MSOs will do direct deals with big national buyers. But this advertiser thirst for more measurable and effective local online advertising options gives operators and programmers a way to use each of their strengths for common profit. For example, Hulu could strike a deal with Comcast to funnel its high-quality content to the MSO’s online portal where customers already localize content depending on their geography. Dynamically slap a local ad in front of the latest episode of “Fringe,” and there you go: Sweet synergy.
Sure, working out the splits is always tough. And yes, Hulu could gather geographic information on its own and bypass cable operators. But all of this goes beyond cyberspace. Cable ops and programmers can fashion comprehensive local ad deals that combine online, VOD, local ad avails, and even at some point GPS-based local advertising via mobile services. Advertisers are dying to say “yes” to these kind of creative proposals. And the Internet could be the place where the door is most ajar: SMI found that nearly half of the national advertisers surveyed are currently pursuing local online advertising, and more than 40% are dedicating at least a quarter of their online marketing budget to local targeting. “The data shows that national advertisers clearly understand the Internet drives in-store sales and they’ve begun to integrate local into their marketing mix,” said Greg Sterling, Principal of Sterling Market Intelligence. “However, they’re all over the map in terms of traffic sources and success metrics; there’s a general absence of consistent tactics and understanding of best practices for local.”
Cable should be there, willing and able to help advertisers navigate the local ad landscape, whether it’s online or on other platforms. Programmers, most of which are national in scope, can’t do this alone—nor should they. And MSOs, most of which already focus on local ad sales through their avails, could benefit by striking partnerships to tap into programmers’ excellent relationships with national advertisers. The only question is whether both sides will act for mutual benefit or cede this new local opportunity to others. Hoping that Verizon and AT&T won’t get their act together fast enough may be wishful thinking. Cable needs to seize the opportunity now.