Thursday, November 13, 2008

OnlineSpin: Taking The Pulse Of The Cable Industry: Takeaways From CTAM

MediaPost's Online SPIN

Last week Dave wrote "DonÂ't Count Out The American Consumer."

Richard Monihan wrote in response, "I donÂ't believe online spending will be reduced by much at all. Advertising in online will refocus to areas that show the best results (search, behavioral, highly targeted placements, etc.), but should increase because the effectiveness is more quantifiable than any other media....

While I expect GDP to decline, there is a closer relationship between ad spending and interest rates. Breaks in that relationship have occurred before, and this is one of those times, but things usually right themselves quickly.

It's unwise to think of things in broad terms that are based on anecdotal stories. The vast majority of Americans are not suffering, but are pulling back and altering their spending patterns. Non essentials are being removed - club memberships, spa days, subscriptions for the wealthier among us.

For the less wealthy, less travel by car, no traveling vacations, no meals out, and shopping at WalMart/Costco. This kind of behavior has become apparent in the last 3 months as consumer spending has dropped precipitously and personal saving has climbed to levels not seen in 4 years.

These savings, eventually, will provide the springboard fo the next boom. How soon it occurs will depend on a variety of factorsÂ…and interest rates are one of these factors...."

Thursday, November 13, 2008
Taking The Pulse Of The Cable Industry: Takeaways From CTAM
By Dave Morgan

I spent the beginning of this week in Boston attending the annual conference and trade show of CTAM, the Cable Television Affiliate Marketers trade association. I hadn't been to a cable meeting in years, so I spent a lot of time just watching and listening and trying to take the pulse of the industry.

It was a very good conference with some very good speakers. And, for someone that has spent most of the past years attending conferences focused on the Internet, I heard a lot of folks and perspectives that I hadn't before. Here's my brief report:


  • Mood of tentativeness. The folks at the conference were generally positive and certainly quite focused, but there was an air of tentativeness. I'm sure that concerns about the economy contributed to that, but it also seemed to go deeper. It seemed that the fundamental issues of Internet bypass and abundant content that are facing all media and communications companies kept folks in check a bit. Please understand, there was by no means "doom and gloom," but folks were certainly a bit on edge about the future.



  • Internet concerns. The challenges and opportunities presented by the Internet were big points of discussion throughout the conference. Obviously, since operators have developed very strong revenue streams around selling Internet access, concerns about how the Internet might undermine their exclusive content distribution franchises was on the top of everyone's minds. This issue is clearly going to be a growing one for these folks over time.



  • Google talk. Yes. It is impossible to go to any conference in any business these days and not have folks talking about Google. Some positive; some wary. Pretty much par for the course.



  • Advertising uncertainty. There was lots of uncertainly around advertising. For one, questions about the economy and some of the recent earning announcements are causing angst for many in the industry. Of course, they're all very happy not to be in the newspaper, magazine or broadcast television businesses. In addition, while there has been much hope for the development of robust advertising sales channels and revenue streams for cable operators, that business hasn't really taken shape yet for them. In fact, many of their ad businesses are actually going backwards given the heavy focus on spend from local auto, retail and consumer finance advertisers, all of whom have been hit very hard in this economy.



  • Lots of hope for Canoe. There was a lot of talk about Canoe Ventures, the much-discussed consortium among the six largest cable operators to build advanced advertising capabilities across the entire cable television ecosystem. While the Canoe executives who presented at the conference did their best to temper expectations, they are still there, particularly given the lukewarm results that operators have been able to create with their ad sales efforts to date. Certainly, this is going to be a key pressure point in the industry over the next year or so.



  • Lots of hope for data. Similar to the issue with Canoe, there is a lot of hope from cable operators that all of the consumer data that they capture in delivering video and communications services to homes will result in new revenue streams from the sale or utilization of that data, whether it is from set-top boxes or billing systems. Once again, this looks to be another "wait and see" issue. Lots of potential; lots of hope. Probably lots of time to wait.


    All in all, my view is that the cable industry is in pretty good health and very well-positioned for the future. Both the operators and programmers are certainly facing some areas of turbulent transition, but those that are smart and focused and innovative are likely to do well for a long time. What do you think?


  • Dave Morgan, founder of TACODA and Real Media, is Chairman of -- and a partner in -- The Tennis Company, which owns, and TENNIS and SMASH Magazines.

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