The End: A Look Ahead at Cable Advertising

After you finish reading this magazine, you’ll decide to begin something new. So to maintain the CableFAX: The Magazine tradition of ending each issue with a beginning — a look ahead — we’ve assembled senior executives to discuss trends in advertising and to take a gander at what tomorrow’s ad landscape might look like.

[This is an expanded version of the story that appears in the print Top Ops issue.]

Our panelists:
SEAN BRATCHES, EVP, sales and marketing, ESPN;
DAN RYAN, CEO, AdGorilla;
CHUCK THOMPSON, EVP, strategic operations, Cabletelevision Advertising Bureau; and
BILLY FARINA, SVP, advertising sales, Cox Communications

CableFAX: The Magazine: What will be the two biggest changes in cable advertising in the next few years?

Sean Bratches: Greater standardization and better audience measurement.  As operators standardize their platforms, the industry is going to realize advanced ad revenue.  VOD, ITV and addressability will target money traditionally earmarked for direct mail and broadcast.  Set-top box data is going to improve the level and quality of audience measurement on a national scale—these advanced metrics are going to continue to put pressure on the marketplace for greater reporting.
Billy Farina: First and foremost, cable advertising will become much easier to buy, particularly for national advertisers. The MSOs have been collaborating on standardization, measurement and technology; this will help advertisers to plan and execute campaigns across operators and measure their results.
    Second, the cable advertising sales force will offer a more holistic view, pulling various types of inventory together (aggregation) so that advertisers can see the bigger picture for their campaign development. We changed our name to Cox Media years ago in anticipation that our business would evolve to be much more than selling cable spot advertising. Today, this is reality.
Chuck Thompson: Content and addressability: Cable’s strength is its ability to connect with consumers in a way no other visual medium can. Cable networks are destinations—brands with identities and personalities that link themselves with viewers at a deeper level than standard broadcast networks or websites. Cable’s continued investment in original programming—$20 billion this past year—will only strengthen the connection. More important, addressable advertising will offer advertisers the avenue to be more targeted and accountable than ever with the video component of their marketing programs.
Dan Ryan: Advertising will be personal and include a significant mobile element.  Advertisers will need to speak directly to consumers, not base messages on who the consumers are, but on where they are, what they’re doing and the information they may be requesting.  It will be more permission-based and will depend on a given geographic location as well.  Fourth-generation WiMAX and LTE networks will become very significant in the way advertisers approach consumers on the move.
    Cable operators will need to follow consumers “out the door” when the consumer moves away from the TV or PC.  But they cannot follow too closely or they will irritate the consumer and lose permission to communicate in the consumers’ conversations regarding products and services.  The cable industry’s attempts to move to the quadruple play will be completely justified very soon as long as we can avoid invading the consumer’s privacy.  We’re going to have access to huge amounts of personal information, and we’d better show that we are the supreme guardians of that information.
    Additionally, consumers are going to demand more control over the advertising content on their TVs and PCs. While in the home, consumers will expect a true interactive advertising experience based on their preferences and the people in the room watching with them.  Again, advertisers and cable operators must respect the communications that are involved in these “discussions” and must protect the consumer’s privacy—no matter how tantalizing it may be to use the information available for large financial gains.
    Independent operators who tend to participate in more localized markets will be especially scrutinized by their customer base due to their visibility in those markets.  I’d hate to be the guy who is known in town as the person who violated the local community’s trust with its personal information. That would make going out in public very difficult indeed.

CFTM: What are you doing today in terms of hiring, technology, etc., to prepare for the changes in advertising you see coming?

Bratches: We’re using our content and brands as vehicles to create revenue-generating partnerships with operators and their advanced platforms.  We’re using digital video on mobile and [online] to complement TV and other mediums.  Additionally, we’re investing significantly in research and technology that will model our audience experience across multiple mediums to allow for better demographic and behavioral targeting.  Finally, working as a truly integrated multimedia sales organization gives us an advantage in an evolving advertising landscape.

Farina: Sean’s right about partnerships. Clearly, collaboration is the future of advertising sales for cable. Cable’s [targeted advertising joint venture,] Canoe Ventures, is clear evidence of this. Individual media companies will find their ability to dominate their particular category eroding, unless they are able to offer their advertisers access to other media and the development of holistic campaigns. Partnerships will continue to increase in importance.
    Updating our infrastructure and enabling tools is crucial for future success. This includes moving toward making our advertising offerings more accountable. We need more standardization in the way we do business and more insights into our customers’ needs. We also need to empower our account teams with robust tools to increase value to our customers.

Ryan: We are searching for technologists who understand the changing landscape from a business perspective as well as the platform perspective.  Eighteen months to market for a new technology that serves the specific needs of the consumer will be too long.  We’re looking for product development cycles that lead to a market launch in 12 months or less. Software tools are available that allow such performance, and our technology team must stay abreast of rapid development processes that are meaningful to meeting the consumers’ needs.

CFTM: How soon will Canoe influence your business?

Farina: Canoe offers great potential and is already changing standards so that there is greater alignment with other media sellers. We want to ensure that buying advertising is simple and efficient, whether in a single DMA or across the entire country.

Ryan: A canoe will capsize when there are too many people in it.  I’d say the initiative is aptly named, unless Canoe can be independent and focused on advertiser and consumer needs.  It has to be all about facilitating transactions. Having six owners is going to make it very difficult to avoid becoming cable-centric versus consumer-centric. There is a huge risk here of the Canoe participants saying “look what we can do” instead of saying “look how effectively and efficiently we can facilitate the conversation between advertisers and consumers.”


CFTM: Whom do you admire most in cable and outside cable for their innovative advertising, and why?

Farina: I admire many small technology companies that bring Internet models to the television infrastructure; there are too many innovators to pick just one. Outside of cable, Google has done a terrific job of leveraging technology for the use of selling advertising.

Thompson: Since I have the fortune of working with so many talented advertising professionals it’s tough to single out one. Yes, I’m being diplomatic. [Advertising] has not always been the most important part of the business, but now more than ever it is becoming the epicenter of cable’s future, and it’s that intrepid spirit that I admire.
    As for an advertiser, I certainly am a fan of the GEICO campaigns. Their campaigns have something for everyone.

CFTM:  Will interactive advertising become a major influence in your business? How are you preparing for that?

Ryan: This is our business, and we’re talking to consumers every day to gauge their acceptance of advertising techniques that are on the horizon.  Invasiveness is a big no-no in the interactive advertising world of next year and beyond.  Consumers will not listen to an advertiser who tries to strike up a conversation at inappropriate times or about products and services that make no sense to them at the time.  Privacy considerations are paramount. Advertising will be a two-way conversation, and what the consumer tells us had better be kept in strict confidence outside of the immediate transaction discussion.  This requires technological “locks” that insure outside intrusion of sensitive databases is not possible.  The cable industry cannot afford the negative press that would ensue from a privacy breach.

Bratches: As operators standardize and upgrade their infrastructure, the potential for interactive advertising is becoming more tangible.  We’re making significant investments in the business, but ultimately consumer behavior is going to determine whether advertising moves from a passive to an active medium.  We have great lessons from ESPN.com and mobile.  From what we know of our fans, who embrace technology and crave data and information along with their sports coverage, we are very encouraged.  

Thompson: Interactive advertising is and will remain a major influence on our business. Where else can advertisers interact in a large-screen video environment in a format that allows consumers to seek out subjects they’re passionate about and where relevant advertising messaging is accepted?
    As far as preparing for interactivity, the infrastructure is in place or rapidly moving in that direction—the demand can be met. Willing partners are welcome.

Farina: Advertising will migrate toward being more accountable, and that includes engagement tools like interactivity. Whether online or on TV, enabling viewers to engage with content of their choosing will facilitate stronger brands and transactional relationships.

CFTM: Will the debate have changed five years from now? Will anyone be discussing the merits of traditional media advertising or will digital have overtaken traditional advertising?

Thompson: If you mean 25 spots on three broadcast networks and a newspaper buy, yes, those days are long gone. Media professionals have been planning in a 100-plus channel multi-platform world for many years. So declaring the merits of traditional media is difficult, since its definition changes annually. I think we need to answer the question of what does digital advertising truly mean to advertisers and consumers. Is it advanced delivery? Is it census-level measurement? Either way cable is responding…in its use of commercial ratings and a commitment to a local posting framework by the MSOs, and of course in the prospects of Canoe Ventures.

Ryan: The debate over the effectiveness of digital versus traditional forms will be over.  Digital will have overtaken traditional in terms of meaningfulness by the end of next year, but traditional forms will be around forever.  Every store needs a barker to get customers inside.  It’s what happens once the consumer is inside that will be dramatically different and where digital advertising takes over.
    Instead, the debate will be clearly centered on privacy due to the opportunities for one-to-one advertising via digital advertising capabilities.  
    Any advertiser that uses private or even seemingly private information in order to promote a product or service unless given specific permission by the individual consumer will be excused from participation, either by the public or by government action.  Advertisers will have to recognize that when it comes to personalized or sub-group communications, they must be invited—permitted—to talk to the consumer on the consumer’s terms. Collecting usage and psychographic data from personal devices such as mobile phones, set-top boxes, DVRs or any other device that contains personal usage info and using it to push products and services by saying to a consumer “we know what you want” will be met with a very suspicious eye.

Farina: Traditional advertising will continue to play an important role in marketers’ campaigns, but new technologies will introduce ways to connect traditional advertising with digital benefits such as targeting and interactivity.

Bratches: In less than five years, we will be referring to digital as traditional advertising, too.  There will always be a debate about the merits and shortcomings of each and every medium.  At ESPN, our mission is to serve sports fans wherever sports are watched, listened to, discussed, read about or played. Our business will continue to evolve to serve this mission.

CFTM: We’ve seen one cable programmer start running what’s being called a microseries of ads in an attempt to keep viewers watching commercials instead of fast-forwarding their DVRs. Will these mini-programs woven into commercial breaks become more prevalent eventually?
If not, how will advertisers keep viewers from skipping ads?

Bratches: There will be ongoing experimentation with commercial and “breakthrough” advertising formats.  Sports is unique, in that we are less affected by DVR time-shifting.  We’ve experimented with short-form content for years with “ESPN Shorts,” to favorable results.  In the end, it comes down to the quality and relevance of the content.  In general, ad creative continually needs to adapt and improve.  Interactivity—voting, polling—will play an increasingly important role, as will contextual relevancy and disruptive creative.

Farina: Micro-series is a creative approach to stimulating viewer and consumer interest. This focuses on making spot advertising more compelling. We’ve only scratched the surface of new approaches that advertisers will take. While technology, including DVRs, is forcing advertisers to be more creative with traditional advertising, it’s also opening a whole new world of possibilities that will allow for more meaningful interaction and transactions with customers. As has always been the challenge, holding the viewers’ attention is a core issue. Providing more relevancy and more control can help advertisers move the needle on holding attention better than they ever have.

Thompson: The use of micro-series will likely continue if consumers show interest. However they may not necessarily become prevalent. Cable’s greatest asset is its connection with viewers. That connection allows advertisers to deliver targeted messages in relevant environments, therefore minimizing ad skipping. Strategic use of micro-series for specific properties in select situations is an effective way for cable to further extend its relationship with viewers and insure even greater retention through commercial breaks. But I do not believe it will become the widely adopted format.

Ryan: Content will always be king, no matter the delivery mechanism.  If you want someone to watch your program, it better capture their attention and have relevancy to them.  Since the dawn of TV advertising, consumers have left the room when advertising that has no appeal is playing.  The DVR is the lazy person’s way of leaving the room.
    Shorter pod times are also key in keeping the consumer’s attention.  Networks are going to have to accept that when a pod is six minutes, a consumer will indeed fast-forward.  But, what if it’s only 30 to 60 seconds, hugely entertaining and relevant to at least the show it’s embedded in?  Why isn’t Lost simply loaded with travel advertising?  Everyone watching is thinking, “Wouldn’t it be cool if I were stranded on an island with all of these pretty people?” And then you see an ad for a car?  I don’t want a car right then, I want to know how to get to the island!  Why isn’t the Hawaiian tourism board advertising like mad on this show? Back to 2008 Top Ops table of contents