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"Koeppel Direct's media buying expertise has played an integral role in making my company successful. Koeppel generated so much business for our company, occasionally we have to limit their media buys, in order to handle all of the new business." | |
| - R. Gregg Marketer of Senior Products |
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MEDIA BUYING DIRECT RESPONSE TELEVISION (DRTV) ARTICLE ...... |
Is the Decline of Cable an Opportunity for DRTV Marketers?
By: Peter Koeppel
Published: 01/07 - ERA |
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This is the time of year that all the media experts attempt to predict advertising
spending for the coming year and analyze trends for the past year. In reviewing various reports and articles,
one trend that stood out was the growing weakness in national cable TV sales. The growth in total cable ad
spending was expected to slow to 6% in 2006 from 11% in 2005, according to TNS Media Intelligence. This
represents a significant drop in ad spending. Cable ad sales were described as "very, very weak" across the
board, according to an analyst at Sanford C. Bernstein & Co. (Wall Street Journal 11/25/06)
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 advertisers. 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 marketers 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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