Decline of Cable an Opportunity for DRTV Media Buying

Cable TV has enjoyed consistent growth over the last 25 years as the service expanded across the country and advertisers shifted their budgets to this medium. Now those days are over according to the WSJ. Money is shifting to the Internet and Internet ad spending is experiencing double-digit growth in the range of 15%-30% annually.
Cable Networks Diversify
The cable networks are now trying to diversify to offset the losses in ad spending, by investing in other ventures. For example, Discovery Communications, which owns 15 cable channels and saw their ad sales and viewership drop in 2006, has started an Internet-based subscription service called Cosmeo that helps kids with their homework and is ad-free. Discovery is investing about $100 million into this venture. Other networks are selling ring tones for mobile phones and song downloads for portable music players to off-set lost ad revenue from cable TV. (WSJ)
The weakness in cable TV ad sales could be good news for DRTV media buying experts. For years, we have seen cable ad rates increase as general advertisers shifted more of their budgets into this medium. If declines in cable ad spending and viewership translate into lower rates for DR advertisers, it would be a trend the industry would welcome, but keep in mind that declines in viewership could also lead to lower response rates. Also, fluctuations in ad rates do not always follow logical patterns. TV networks have consistently tried to raise rates, despite a loss of viewers, due to factors such as media fragmentation and viewers zapping through commercials with DVR’s.
Adopt a Multi-Channel Advertising Approach
Savvy DR media buyers need to try and capitalize on the weakness in the cable marketplace. They also need to realize that consumers are spending more time on the Internet and take this into consideration in their media planning. However, to put things in perspective, time spent on the Internet is still only 20-25% of total time spent with all media and Internet penetration is only 70%, so there’s still room for significant online growth (Ad Age 12/4/06). This means that a balanced, multi-channel advertising strategy, incorporating several mediums into your media mix is more important than ever if you want to succeed in today’s rapidly changing media environment.

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