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Cable Technology Feature Article

September 17, 2012

Cable Advertising Commitment Grows Five Percent, Approaches $10 Billion Mark

By Steve Anderson, Contributing TMCnet Writer

The recently concluded upfront for the 2012-2013 cable season offered a note of good news for the cable networks: fully $9.8 billion in ad revenue for the season, which represents an uptick of five percent over the previous season. But even this stroke of good news isn't the good news they would have liked, and there's a surprising dark cloud attached to this silver lining.

An upfront, for those not familiar with the term, is an annually-staged event in which networks, both cable and broadcast alike, show off what's going to be coming out in that particular year on their networks in a bid to get advertisers interested. The events are often star-studded affairs, huge parties featuring the casts of these new shows, as well as promotional trailers, all geared toward getting those advertisers to sign up for advertising on the new season. While this particular upfront netted some big gains for cable networks, the problem was that, this year, the gains were nowhere near as large as they were.

Gains have been on the decline since the 2010 upfront, in which a 19 percent gain was realized over the previous year. The 2011-2012 upfront saw a 16 percent gain over the previous year, and now, it's up just five percent over that one. Considering, though, that the total advertising volume is up nearly 25 percent over the low water market in the 2009-2010 upfront, it's still pretty good news.

Further problem comes in when the issue of the broadcast networks' own upfront efforts come into play. The broadcast equivalent of the cable upfront fell flat, and in some cases, was even down from the previous year. The Cabletelevision Advertising Bureau's CEO Sean Cunningham explained the discrepancy, "Being in constant touch with agencies and advertisers we are told that cable brands are being relied on to play an every larger and leading role for U.S. advertisers in driving their consumer sales."

More specifically, cable brands are perceived as having a stronger consumer connection (and why not? They're paying for access to those brands, after all!), offer more and in many cases better original programming, have grown audiences to improved positions, and are even beginning to offer more multi-platform deals.

Basically, cable is being seen as a much better deal than its broadcast equivalents, and this is likely the case. While there are still strong numbers of folks in the cable-cutter movement, the overwhelming majority of people not turning to Netflix and the like is still focused overwhelmingly on cable. This makes cable especially valuable, as it's holding a wide potential audience for advertisers to try and hit, and those who don't advertise will likely find themselves out of business before long.

The entertainment industry is still, as ever, a strange animal, but it's clear that there are changes afoot, big and sweeping, that will affect the whole in ways we likely can only guess at...for now.

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Edited by Brooke Neuman

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