"Cable speaks to our business audience in a powerful way," Mr. Pacheco says, echoing marketing executives at various other companies. "It allows us to be a little more targeted."
Cable spending is softening along with other ad media in the current sagging economy, but Mr. Pacheco says cable will continue to play a significant role in FedEx's marketing mix. "We have a three-year and a five-year plan for our media," he says, "and we have given quite a bit of thought to cable. We are feeling pretty bullish about it."
MIX OF CABLE NETS
FedEx uses a mix of news, sports and entertainment cable networks to reach its target of professionals, owners and managers of small to midsize businesses. A secondary target audience is the "C-level title holder of CEOs, [chief information officers and chief financial officers] who may work for a Fortune 500 company."
Mr. Pacheco says cable advertising "is getting to be a bigger share of our advertising budget. The majority of what we spend on TV is on the national networks, but cable continues to creep up. ... We are seeing the fragmentation of network TV audiences, and some of the programs that they offer are less than stellar. With cable, you know what you are going to get, especially with cable news and cable sports."
FedEx isn't alone in its increasing use of cable. The top 100 business-to-business advertisers spent $469 million on cable in 1999, 50.3% more than the previous year, according to data compiled by BtoB, a sibling publication of Advertising Age. Cable's sharp increase was the largest of any of the 11 media categories tracked, including network TV, which rose 34.7%.
Mr. Pacheco also appreciates the value-added merchandising packages that the cable networks put together for FedEx. "Generally speaking, cable has been more flexible than the broadcast networks in allowing us to do creative things like merchandising," he says.
Examples of value-added merchandising include the long-running FedEx "Delivery of the Day," a sort of play of the day that appears during CNN's sports segment, and a deal with A&E to include some FedEx ads in its Biography magazine and on its Biography.com Web site. Media planning and buying for FedEx is done by Omnicom Group's OMD, New York; sibling agency BBDO Worldwide handles creative.
Every medium has its limitations, including cable, which usually can't match the reach of the broadcast networks, says Caroline Riby, VP-communications director at Publicis Groupe's Saatchi & Saatchi Rowland, Fairport, N.Y. Ms. Riby, a veteran media planner, says that while a cable buy is generally less expensive than a broadcast network buy, prime-time network TV may be cheaper on a cost-per-thousand basis because of the massive audiences prime-time network shows can deliver.
While cable audiences are generally smaller, they're more segmented, which makes cable an ideal medium for businesses, including newer companies, to introduce themselves to a select audience of business decision-makers. Young technology companies, including many of the ill-fated dot-coms, turned to cable in the last several years to introduce themselves and establish a brand.
"There's more impact to a TV spot than print because there is a certain mystique," Ms. Riby says. "Once something is in broadcast form, it suggests the company has some strength and stability. For many newer technology companies, cable was the next logical step after print."
B-TO-B MORE COMFORTABLE
The dot-com bust notwithstanding, the recent explosion of cable spots by new technology companies had the effect of making "business-to-business spots on cable more mainstream," she notes.
Cable is an attractive medium for b-to-b advertisers because it's so targeted, says Joe Ostrow, president-CEO of the Cabletelevision Advertising Bureau. "When someone turns to a particular cable channel, they have a stronger affinity for what's being offered because the product or service is something they are already involved with."
Cable is the preferred TV medium for many b-to-b advertisers. Citing 2000 figures from Taylor Nelson Sofres' CMR, Mr. Ostrow notes that marketers of copiers and duplicating equipment spent 58% of their TV budget on cable, up from 12.7% in 1999. Advertisers of office machines and equipment spent 100% of their TV money in 2000 on cable, he says.
Pam Crumpler, director of small-business marketing for Sprint Corp., says her unit spends a significant part of its ad budget on cable because it drives response more effectively than broadcast network or spot TV. There's also the cost factor.
SIGNIFICANT PART OF MIX
"With our limited budget, network television costs are way off the mark for us," Ms. Crumpler says. "We are finding that cable is the best buy for our dollar. We are not necessarily going to be using more cable in the near future, but I will say it will be a significant part of the mix."
All Sprint small-business spots are tagged with an 800-number that allows "us to track calls on a daily basis," she says. "If, for example, we see that MSNBC is generating a more efficient response than CNN, then our buyers will renegotiate with CNN for a better rate or we'll pull out of that network."
Todd Baker, Sprint's senior program manager, who directs some of the telco's large-business marketing, says cable usually commands the lion's share of Sprint's large-business TV budget. Pro-grams on such financial channels as Bloomberg, CNBC, CNNfn and MSNBC, as well as entertainment channels like Bravo and Discovery, "allow us to reach the sweet spot of our target audience."
Mr. Baker says cable will continue to be a significant component of the media mix, though he adds it's difficult to predict near-term plans for cable because "We need to look at our priorities as we go into each planning cycle."
Technology services company Comdisco last summer ran its first b-to-b cable campaign. The six-week branding effort on several financial cable channels allowed Comdisco to talk to C-level executives at Fortune 500 companies while still working with a limited budget, says David S. Bassin, VP-corporate brand management.
"We felt that going the cable route would be the best opportunity to reach financial and business executives," Mr. Bassin, says, adding that results of the campaign were positive.
Novell, a marketer of Internet software, reports positive results from its cable campaign that launched in 2000's fourth quarter.
"Those who have had the opportunity to see the ads several times are much more familiar with Novell's story and key elements, and have increasingly favorable views of the company," says Tracy Merrill, Novell's director of brand advertising. Even better for Novell, viewers of the commercials on cable have been found to be more likely to buy or recommend a Novell product.