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New digital ad insertion systems at cable interconnects and local operators have greatly improved the flexibility, quality and reliability of local cable.

The programs are allowing advertisers to personalize spots specific zones-a marketer's dream since narrowcasting dawned.


These technological improvements are giving spot cable another chance to grab advertisers.

"Digital technology is helping local cable stations compete with the bigger broadcasting networks because the new technology is allowing for faster ad insertion and giving buyers a chance to get their messages out faster," says Liz Bratman, senior partner, associate director of local broadcast at Ogilvy & Mather, New York.

Cable operators see advertising as a revenue source that's yet to be fully tapped. With broadcast TV viewing levels generally declining, cable operators can sell advertisers on cable's growing viewership.

Also, despite the recent passage of the telecommunications reform bill, operators have cooled on the potential of cable telephony, with its regulations, competition and heavy capital investment. And although operators believe cable can offer consumers fast access to the Internet, a widespread cable modem system is still several years away.

As a result, operators view advertising as an easier, quicker alternative to boost total revenues.

"People are making plans now to invest in the equipment next year," says Roger Horine, marketing manager of Digital Equipment Corp.'s New Media Solutions group, which offers a digital ad insertion system.

Digital's technology currently is running in Los Angeles and Toronto interconnects. But Mr. Horine, who predicts almost all cable ads will be handled digitally within two years, says several agreements are forthcoming.

Digital ad insertion systems, from companies such as SeaChange Technology, StarNet Development, Channelmatic and Texscan, encode ads from an analog tape format into a digital computer file. From there the ads can be sent as a computer file, using any standard computer network, to servers at cable head-ends via methods such as phone lines, satellites or the Internet.

Going digital has made the look of cable spots much cleaner because there is no longer a need to recopy spots on analog tapes.

"If you've got good video, you don't want to lose it," explains George Barnard, ad sales director, Time Warner Cable, Greater Boston Division. "Every time you make a copy of tape you lose some of the look."

Mr. Barnard says ad revenues in his division grew 35% last year, and one-third of this increase is attributable to digital capabilities.


Digital ad insertion also allows for specialized ad tags and ad copy for specific zones. Car dealerships, grocery stores and movie theaters are among the businesses who have benefited the most from this technology, interconnect representatives say.

These marketers can target customers by showing ads in specific zones. Tags allow the business to list the name and number of the local establishment; digitized ad copy allows a business to change its message according to target zone. This way a car dealership can promote its top-of-the-line vehicles to upper-class areas, while pushing its lower priced cars to lower-income sections.

"In the past if grocers had too many bananas, they depended on newspapers because of the quick turnaround," says John Coulbourn, director of communications at SeaChange Technology. "Now grocers can use cable to advertise a sale in markets where customers live."

Another category taking advantage of digital ad insertion benefits: political advertising, which has firmly embraced digital's ability to make quick message changes.


"In the old days when you wanted to change a message a whole new reel would have to be built and it was a cumbersome process," Mr. Barnard says.

"A candidate needs the speed of digital technology to respond to an attack from an opponent," says Mr. Barnard, who estimates there's been a ten-fold increase in political revenues since the start of digitization.

One important factor that will make the medium more attractive is digital ad insertion's accountability.

"Digital allows information to be more readily available-you can look at information on a screen and see if an ad ran properly," says Mr. Coulbourn.

"This eliminates the need for human viewers filling out log books," says Mr. Horine.

Despite digital technology's capabilities, it hasn't been able to eliminate perennial problems with buying local cable. The paperwork is still more extensive than broadcast TV, methods for measuring viewer demographics lack refinement, and many buyers feel local cable is still an expensive medium.

"Cable spots sell like newspapers-in terms of numbers, not demographics," says Eric Koehler, president of the Pinnacle Media Division of Wyse Advertising, Cleveland.


"There's zoning by ZIP Code and theoretically you reach all of the expensive residences in one area, but that still doesn't tell you who is or how many people are watching. Cable's not as fine-tuned as broadcast, but it's going in the right direction," he says.

The leading digital equipment makers are optimistic that local cable will continue to head in that right direction.

"There's going to be much more cooperation with major markets in this country, which will make cable increasingly attractive to national advertisers," says Mr. Coulbourn.

Adlink, a West Coast interconnect service, has seen a dramatic increase in ad sales since it installed its digital equipment last October, says Lynn Bolton, local sales manager. Ad revenues this year are projected to increase 20%.

"More and more viewers are tuning in to cable, and it really has become a viable option for advertising," says Ms. Bratman. "We're not committing a substantial amount of our client's money, but just enough so they benefit from what cable has to offer."

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