Cable adds ads
Ad revenues soar 17% to $2.68 bil
The ad revenues are coming on the heels of double-digit ratings increases for cable, which also benefits from a lower base than the broadcast networks: While cable could pull in a projected total of between $6 billion and $7 billion for 1998, the broadcast networks will rack up close to $14 billion in ad revenues.
Cable's booming growth "is not surprising," says Peter Chrisanthopoulos, president, broadcast and programming, USA, for Ogilvy & Mather. "Advertisers are redeploying more money to cable because cable's ratings were up more than 10%" for the six-month period.
Complicated reasons
Bob Coen, director of forecasting for McCann-Erickson, which publishes some of the most authoritative dollar projections in the industry, says the reasons for cable's great first half in ad revenues are more complicated.
Cable signed up a number of advertisers it wouldn't normally have had access to, Coen continues. These advertisers, he says, got priced out of the broadcast network marketplace because of a booming economy that allowed sales executives for the Big Four to jack up their prices despite declining Nielsen ratings.
These jacked-up prices also turned off some of the big advertisers, who got even by funneling a larger percentage of their media budgets to cable in 1997-98, according to Coen.
But the broadcast networks were not able to get away with inflated prices in the upfront marketplace three months ago, Coen says, so cable's ad dollars may not grow as bountifully as they did in the first half of the year. His forecast gives cable a 13% increase for the full year of 1998, topping out at $6.2 billion.
Another view
By contrast, Joe Ostrow, president and CEO of the Cabletelevision Advertising Bureau (CAB), which compiles the cable numbers in partnership with the Broadcast Cable Financial Management Assn. and Price Waterhouse Coopers, says that 1998 ad revenues for all of the national cable networks could hover close to $7 billion, which would represent a $1 billion increase over last year's total.
Coen's colleague at McCann-Erickson, Bill Sherman, VP and group head of national broadcast, says cable is coming off a strong upfront selling season as advertisers become more comfortable with cable's relatively lower prices and with the ability of its niche networks to serve up targeted audiences.
New programs
Another big reason that cable has attracted more of Madison Avenue's dollars, says O&M's Chrisanthopoulos, is "the increase in original programming generated by the cable networks."
He also cites the expensive rerun programming that cable networks are going in hock to purchase. Recent off-network series buys include "ER" on TNT, "Party of Five" and "Chicago Hope" on Lifetime and "Xena" and "Walker, Texas Ranger" on USA.
All of this high-visibility programming contributes to ratings growth on cable networks, galvanizing the attention of advertisers eager to get their messages out to as many eyeballs as they can reach.
