Cable sets the upfront table

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Double-digit increases for the cable upfront are expected again this year, but for different reasons than last year.

Cable networks in 1999 were getting credit for higher ratings and improved programming.

The bounty in this year's upfront picture is expected to come from new money pouring into cable TV networks' coffers from dot-com advertisers and the booming pharmaceutical and financial services sectors, say media buyers and analysts.

Cable is suited to the lower out-of-pocket costs required by dot-coms that have less available cash, while financial services and pharmaceutical advertisers have found opportunities on cable to target niche audiences with complex messages and 60-second spots that are often prohibitively expensive on network TV.


"Cable ratings in many areas fell in the last year, but the cable sector will be strong again thanks to financial services and pharmaceutical advertisers . . . finding excellent opportunities to target certain groups of consumers," says Jon Mandel, co-managing director of Grey Advertising's MediaCom, New York.

Pharmaceutical marketers targeting senior citizens are getting particularly good results from cable, which "typically overdelivers" senior citizens on targeted channels, Mr. Mandel says. MediaCom's pharmaceutical clients include SmithKline Beecham and Pharmacia & Upjohn, marketer of such products as Detrol, a bladder-control product typically promoted to an older generation.

NBC's multiplatform broadcast of the Olympics and the presidential elections this fall will also tighten advertisers' options, with the net effect that many advertisers are expected to lock up heavier cable upfront commitments than usual.


Sara Lee Corp., which plans to buy during the TV upfront, more than doubled its total cable ad spending from 1998 to 1999, to a total of $35.5 million, according to Competitive Media Reporting.

"[Sara Lee] boosted cable," says Bob Fellows, VP-advertising, "because it served the dual purpose of allowing us to target specific audiences and it also gave us the opportunity to spread our spending across our disparate line of products. . . . We'll decide whether or not to boost our cable spending again based on the marketplace and the pricing in the upfront." Starcom Worldwide, Chicago, is Sara Lee's media-buying agency.

"Cable will have another strong year, with the business-to-business sector looking like the new hot spot," says Ed Erhardt, president of ESPN/ABC Sports Customer Marketing & Sales.

National cable network spending reached $8.75 billion in 1999, according to Competitive Media Reporting. The boom in dot-com advertising over the last year has boosted cable networks' bottom lines considerably (see story on Page S-60).

"We'll see a lot of more complex deals involving big budgets and media-buying conglomerates that have a lot of muscle to flex. I wouldn't want to be a small advertiser with a small media-buying shop," says Page Thompson, president of Optimum Media, New York, DDB Worldwide's media-buying operation.


In general, the broadcast market moves first, followed by cable, but media buyers and cable TV networks say big deals are now being hammered out before and during the broadcast upfront frenzy.

"The trend is to consider cable as part of the total television picture, because the media are certainly blurring in the consumer's eyes," says Lynn Picard, Lifetime exec VP-ad sales. She says Lifetime began inking deals with advertisers in early May, getting ad commitments for fall programming, including two new series, "Strong Medicine" and "City Lights."


The network will also introduce a show based on people's real experiences called "Beyond Chance," hosted by musician Melissa Etheridge. She would not disclose the names of advertisers discussing deals, but current advertisers on the channel include Sprint Corp., MCI WorldCom and Warner-Lambert.

At Turner Broadcasting Co., about 40% of the major upfront ad deals for its various cable networks are expected to be locked in before the traditional mid-May launch of the cable upfront selling season, says Liz Janneman, Turner's exec VP-entertainment and sales.

"It's going to be brisk this year, faster than last year," she says.

Without disclosing the names of any advertisers expected to close deals with Turner, she says the company expects double-digit gains in 2000 across all advertiser sectors.


Cable's allure for bargain-seekers is fading, as advertising inventory prices have risen over the last year with cable's fortunes.

"Cable is not so much a bargain as it is a good value in certain scenarios, but in many instances the gap between cable and broadcast is narrowing, and it requires close scrutiny to get that good value," says Harry Keeshan, senior VP-national broadcast for Creative Media, New York.

Cable's rising prices have irritated some media buyers, who say cable networks have boosted prices too high for the relatively smaller audiences they capture.

For years buyers paid the higher cost-per-thousands cable networks charged advertisers, routinely accepting the argument that cable viewers and their demographics were worth more than the CPMs charged by the broadcast networks. But as the spread lengthens, buyers are finding that argument questionable.

"There is no cable network I can't buy around," says Bob Igiel, president of Media Edge, New York, the media buying arm of Young & Rubicam. "The cable networks are having a good year, but that's no guarantee they'll get prices higher than what they're worth."

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