Cable's 2012
prospects: So very rosy
Ad spending is expected to top $22 billion
By Toni Fitzgerald
Dec 22, 2011
Cable television was one of the first media categories to start recovering from the recession, and this year it was also one of the few categories where ad revenue continued to grow as ad spending on other media dried up.
Next year that healthy spending on cable will continue even as other areas of television, including syndication and broadcast, fall into negative territory.
Buyers are increasingly attracted to cable's low rates compared to broadcast, especially for broad-appeal networks like USA, TNT and TBS, which draw ratings comparable to small broadcasters.
They are also encouraged by the ratings growth seen on cable and the networks' openness to adding cross-media components to cable buys, such as digital packages and billboards.
That, combined with the continued migration of big sporting events such as the Bowl Championship Series and NCAA men's basketball tournament from broadcast to cable will boost cable ad revenue to an all-time high of more than $22 billion next year, according to several forecasters.
"It really comes down to two things," says Marc Morse, senior vice president of national buying at RJPalmer.
"The ratings overall are going up on cable, while network ratings are coming down slightly every year. The other factor is cost. We buy on a CPM basis, and the CPMs are much lower in cable."
Pivotal Research forecasts that U.S. cable ad spending will rise 4.8 percent next year, while UBS predicts a 5 percent rise.
ZenithOptimedia is the most optimistic, forecasting that spending will jump 10 percent after growth of 12 percent this year.
Morse notes that the number of cable networks has risen sharply over recent years, with more than 100 channels now on the basic cable spectrum.
That's led to an increase in targeting by psychographic, or demographic profile, that isn't available in some other media.
Home improvement stores, for example, want to get on HGTV because people watching the network are more likely to be doing home improvement projects.
And advertisers that get in at launch on a new network are more likely to build relationships with that channel, leading to more favorable pricing for the advertiser as the network builds.
"If you can be on the ground floor as they launch, you can secure good pricing as they grow and establish a good reputation," Morse says.
Added value is another thing buyers will look for increasingly in 2012. Though some of the bigger networks eschew such deals, buyers say it can be a deciding factor in who gets their business.
"Some networks are willing to do really great things for you that clients want, like features, preroll and digital packages along with TV," Morse says.
"But it has to make sense on a cost basis."
Finally, sports networks will continue to be a hot cable buy in the new year, and
not just ESPN, though it will once again lead the way.
"I could see more sports deals [that had been on broadcast] going to cable in the future," Morse says.
"Particularly with the NCAA tournament on Turner this past year, they have a deal with CBS that helped the overall ratings by going to cable. They were able to gain not only ratings but overall dollars were up."
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