The Catalyst

Okay.

Get a cup of coffee. Prepare to get really upset.

An article from a well-read media publication recently espoused the “cost efficiencies” of cable zones over local broadcast television.

Pardon the look on my face … but … “Excuse me?”

Not only does cable do a great job selling this concept, but the media industry rag fails to realize that the terms efficiency and local cable can not be printed legally on the same page or in the same edition.

Is somebody at a TV station going to call attention to this? Or will we let it slide, just like all that biz we let slide to cable? Either nobody read the article closely, or the broadcast industry is grossly misinformed about a critical point here. 

We sat with an attorney, let’s call him Ben Had, not too long ago. Now last time I checked, an attorney needs to pass the bar. This requires weeks of studying. Ben is definitely not a C-student.

So, how many Ben Hads are giving cable $50K-$100K annually? How many are in your market? (Double that guess.)

How many Ben Hads really understand that maybe fixing their message will be nothing more than a waste of precious time because their media math is so flawed?

How many broadcast television salespeople have gotten in front of a couple dozen of the Ben Hads of the world and simply asked for a cable invoice … and then wagered lunch that their station could reduce the ad budget … while driving up the audience … thereby reducing the advertiser’s acquisition cost … and as a result, increase the advertiser’s profits?

How is it then, that something as simple as the proper parameters of media cost-efficiency can confuse somebody so bright?  Our lawyer said that cable was cheaper, because “the spots only cost $10.”

Ben then went on to say that he has never gotten a phone call from this campaign, but because the contract is “non-cancelable”, he’ll just have to live with this mistake, honor the contract, and then right the ship when he can.  Why does this happen?

It happens because broadcast television has chosen to let cable do their thing and not be held culpable for their advice and actions.

Folks, we are being out-sold, hoodwinked, and laughed at by cable.

Questions:

• What is local cable billing in a mid-sized market (e.g. 50th DMA)?  Is it $5 million?  Is it $7 million?
• We could surely grab 10% of this in short order.  This is a fact.  How quickly would $500K swing a share point in your direction?  Adjust the math for your own DMA.  It all works.
• What is the average local advertiser spending annually on cable in a perceived “non-cancelable” contract?
• How many of these folks can point to cable and say, “Yup, that cable stuff is just rocking my phones off the hook”?
• How many of these folks truly understand that they cannot afford cable?  How many have been told as much?
• How many cable reps actually understand that they are driving up their clients’ acquisition costs? 
• How many TV salespeople are using their DVRs to record cable in order to develop a prospect list of broadcast-wannabees?
• How many TV salespeople really understand and can speak articulately to this point of cable CPMs?

We prepared a spreadsheet for a client to illustrate that, while the local broadcast CPM was $3.57, cable was “clearly” giving him a better deal with more spots, a cheaper cost per spot, zoning, targeted spots in some fancy-schmancy home show, bonus spots, AND (drumroll please) production … all for a measley $186.77 CPM.  Yes, there may be a touch of sarcasm mixed in for good measure.

How cool would it be to sell your 6am News at a $186.77 CPM clip?  Wouldn’t that equate to roughly $3,300 per spot in our 50th DMA?  Heck, we could deep-discount the bookends for $1,500 a pop and retire early!

Obviously, some of our local advertisers struggled through math in school, because they clearly seem to have fallen prey to the same hoodwink that countless others have gotten slammed on. But is their math bad, or is ours?  (By the way, slammed is a term that actually originated in the business world in the late 80’s when hustling long-distance phone salesteams would call you, offer the world via switching to their plan, and then “slam” you or your business into some lame program that actually costs more than your prior phone bill.  Sounds like cable ripped a page out of that playbook … or hired a few of those salespeople.)

But I digress.  Back to the point.

Why would a local business want to pay 52 times more per thousand to reach the same potential customers?  That’s like buying a week’s worth of audience for the price of a year.  Bargain!

Does the soccer-mom who watches HGTV also watch your news?  So therefore does a local business owner know that he/she has the choice of reaching these soccer-moms at single-digits per thousand or triple-digits per thousand?

Do we even need to get into the standard deviation inherent in these numbers?  Given the standard deviation as noted by NSI, could it be that maybe, there’s the outside chance, that at times nobody is watching cable?  I’m sure that statement may get a few former long-distance salespeople to post a comment to this rant!

Steps to take as a broadcast manager:

• Get really mad (I’ll try to keep it clean).
• Start with the conference room … I believe I saw a DVR sitting on the shelf.
• Record all the “shelter programs” because those are the ones that seem to get local owners excited.
• Record all sports programming because, again, that’s what seems to get the local business owners excited.  Our lawyer friend paid $250 per NFL game … a game that airs only in specific zones … what is this poor guy’s CPM … we should know this folks!).
• Be fluent in this concept and the math involved, and instill the same in your team.  Each salesperson must be able to confidently articulate the sizable difference in cost-efficiencies to prospects and clients alike.
• Stay angry (again, my apologies).
• Develop a cheesy name for this sales department cable crusade.  What about Disable Cable in ‘09, or better yet, Let’s Go Kick Some Cable Backside Now So That We Can Make Some Money in ‘09 (this one is a bit longer but would look awesome on t-shirts to be worn by the sales department on casual Fridays).

Maybe for all the Catholics out there, we could send an email to all the cable advertisers in our market simply asking them if they might know when their cable rep last went to confession!  Sorry, but I was taught by the ruler-wielding Fr. Saint Laurent and his hefty sidekick Sister Imelda that stealing was clearly, and still is by the way, a sin. 

Capturing this extra point of share will save your future clients loads of money, and make them more profitable.  Should help you sleep better, regarldess of your religious affiliation.

Or, maybe as an alternative, we can avoid rocking the ship.  Because the status quo seems to be working fine for both us and the advertiser, right? 

Better yet, why not call them up, and ask them if they’re interested in increasing their profits with little-to-no effort in the near-term?  That might do the trick too. 

And, you might just get a free lunch out of it.

Roland Eckstein is the Managing Partner of ESA & Company, an advertising consultancy that accelerates profit and growth for local businesses.