Hank Kim discussed the network's philosophy and strategies with Steve Gigliotti, exec VP-ad sales and emerging media for the Knoxville, Tenn. cabler.
MV: Owing to Scripps's hard-news heritage with its newspaper and TV station holdings, I can understand why your company would take such a hard-line against paid product placement. But with many of your competitors in cable aggressively pursuing these deals, don't you feel you're at somewhat of a disadvantage with advertisers?
SG: The designers of these networks have been very focused since the beginning on the relationship between the content and the consumer…Because we learned our audience looks at our brands as reliable sources for information, we're very concerned about doing anything that would intentionally or non-intentionally mislead the viewer. If we are putting products into the program or our hosts are using products they would not normally use because of a financial arrangement, that would jeopardize our credibility with our viewers. To be honest with you, even our oldest advertisers understand and to some degree applaud our stance. They know we don't do product placements for anybody.
MV: Level playing field aside, that doesn't nullify advertisers' concern about technology-driven fragmentation and emerging technologies like [personal video recorders]. Aren't there advertisers really pushing for solutions?
SG: Our position is taken with the consideration of the interests of advertisers breaking through the clutter. The research for the past five years tells us that our viewers see the ads placed [between] our programming as resources, not as interruptions. Advertising is endemic to the content, which is not often true in television. By the way, our networks are some of the least-cluttered networks on television. HGTV only has 10 minutes an hour. Beyond that, we have built some interesting short-form advertising interstitials to help brands bridge the clutter issue. These vignettes give advertisers the opportunity to embed themselves in related content to come up with messages that are even more aligned with their products or services. For example, on the Food Network, we offer Food Bites, where an advertiser like Dannon yogurt can, in a one-minute window, offer a recipe using Dannon. We tested that very recently and it blew away our expectations. These were better than most commercials because they were actually usable. It beats product placement hands down. These vignettes have also been extended to non-endemic advertisers.
MV: If PVRs and [video on-demand] and other digital technologies really gain traction, what impact will that have on your industry and on your networks?
SG: What will happen is the pressure on the advertising community to create compelling advertising will increase. We have a project where you can use long-form four-to-five-minute advertising within the cable network programming as long as it's compelling—like BMW Films—or we won't do it with you. For example, somebody downloads a VOD from a Scripps network about the 15 greatest kitchen designs and at the end of the VOD, you do [a few] minutes on how Viking kitchens were created. That's exactly the right combination of what future worlds will exist on.
MV: There are some pundits out there who predict that if PVRs do achieve scale, it will be smaller, vertical cable networks, like yours, whose business models will be in jeopardy. Do you agree with that assessment?
%%PULLQUOTE_LEFT%% SG: What will survive all of this will be trusted brands where people will have expectations to find quality, reliable programming. That is what our company provides. With many of the larger cable networks, I don't know if you can consistently find that across all their programming. Now, that said, you have to have the wherewithal as a company to survive and there are some narrow-casted networks that don't have the wherewithal to survive the future. I'm pleased this company is in perfect position to survive.
MV: There seems to be a plethora of shows on your networks and on some of your competitors' networks like "Trading Spaces" on TLC that attempt to leverage the home-improvement genre. Are you concerned that you're risking a viewer backlash to this type of programming?
SG: First of all, we've been doing this for nine years, so you need education in how to do this pretty quickly if you're gonna compete. And our viewers know where we are every day. These others are actually recruiting for us because we'll get credit for their shows because people know our brand. HGTV has recorded the highest ratings in its history in the last six months despite all of the increased competition.