According to a recent Pike & Fischer (News - Alert) report, "Cable Advanced Advertising Market Outlook," the U.S. cable industry is unlikely to obtain the level of annual ad revenues that it is expecting over the next few years.

 

This information was discovered despite the rapid enhancements in advanced interactive advertising over cable networks.

 

Cable executives aim to increase advertising revenue from approximately $5 billion generated in 2007 to as much as $15 billion a year once they have completed a standardized, cross-operator platform capable of supporting interactive advertising on a national basis. Much of this effort is being pursued through Canoe Ventures, a joint venture involving cable operators such as Comcast and Cox (News - Alert) Communications.

 

However, P&F Chief Analyst, Tim McElgunn, predicts that the U.S. cable industry's annual ad revenue will not top $10 billion before 2015. This means that cable operators will have to wait a long time to see a significant return on investment.

 

McElgunn lists several reasons for his predictions, including the time-consuming task of reshaping age-old advertising tactics, reduced spending by advertisers across all media, competition from online advertising, and the intensive privacy protections that will have to be embedded in the gathering of user data to enable such features as personalized ads.

 

"Given the immense complexity of first creating such a platform and then using it to disrupt the existing advertising food chain, it will take years and many millions of dollars in capital spending before its impact will be sufficient to allow cable to capture more than a small percentage of total ad spending," McElgunn says.

 

Pike & Fischer, a BNA company, provides a host of legal and business products covering the telecommunications industry.