Don’t look now, but there are some new kids on the cable advertising playground — and they’re armed with money, technology and desire.
They include some familiar names bred by the dot.com era: Google, which is bringing its successful online advertising-auction approach to local cable television; eBay, which wants to let national advertisers buy cable network time through an Internet-based auction platform; and a well-capitalized Los Angeles startup, Spot Runner, which lets small businesses buy local cable commercial schedules over the Internet.
For local cable account executives, these newcomers raise the same question automobile assembly-line workers began asking in the 1960s: Is my job about to be taken over by a robot?
Nobody is answering “yes” right now, but there’s more than a hint of intrigue surrounding the notion as an unanticipated wave of activity emerges to apply to cable television some of the do-it-yourself attributes of Internet advertising. It’s a world where companies buy advertising not after lingering over expense-account lunches or evaluating presentations from well-practiced account executives, but instead with a few anonymous clicks of a computer mouse linked to a vast electronic database.
Spot Runner’s 2006 entry into local cable first raised the possibility that advertisers might embrace a new approach to getting local commercials on cable systems without the intervention of a cable sales specialist. Using a combination of pre-produced video material and Internet-based scheduling and payment processes, the brainchild of two wealthy Internet entrepreneurs is designed largely to give small businesses a cheap, easy way to advertise on television.
Spot Runner describes itself as an Internet-based ad agency and takes pains to make its platform accessible to local cable ad executives. But its platform can easily enable advertisers to execute full-blown, start-to-finish campaigns over local cable outlets without the participation of a salesperson.
More startling is the entry into the local cable marketplace by Google, which wants to bring to the category some of the same auction-style attributes that have made it the dominant provider of Internet search-oriented advertising messages.
In March, Google began selling local ad time on Wave Broadband’s northern California system using an online ad-reservation platform. Since then, Google has struck a deal with direct-broadcast satellite provider EchoStar Communications to sell a slice of the advertising inventory that some cable networks have made available to its Dish Network. The arrangement makes use of an auction process that allows users to bid on and reserve commercial slots online.
The Internet giant reportedly is plotting a similar deal with DirecTV.
On the national network front, eBay is helping big companies like Home Depot and Toyota buy cable ad time through an online auction platform, although for now the effort appears to be doomed by disinterest from major cable network groups and trade association the Cabletelevision Advertising Bureau.
For participants in multichannel advertising, the presence of Internet-based sales agents isn’t entirely threatening. Some say the ad-reservation platforms envisioned by Google, Spot Runner and others offer potential cost savings and benefits that can help cable companies and their sales staffs get campaigns on the air quickly and efficiently. But others contend that turning over the business of interacting with advertisers to an online ordering platform ignores many of the nuances that talented salespeople bring to bear, and could end up compromising rates advertisers pay to reserve time.
“I don’t care if it’s a cattle auction. It has a tendency to not necessarily make your rates very consistent,” said Jodie McAfee, senior vice president of The Media Group, a Denver-based advertising and TV programming company that sells Dish Network ad time the old-fashioned, human way.
McAfee has mixed feelings about Google’s plans to auction off its allocation of Dish inventory, which represents a minority of the satellite broadcaster’s total ad time.
He said it’s possible that The Media Group’s own sales force could make use of Google’s spot-reservation platform, and might even bid on ad time through Google as a way to supplement the company’s traditional brokered campaigns. But McAfee is also wary about discarding the people factor from the advertising sales equation. “For me at least, the idea of repping advertising inventory involves a human element,” he said.
That’s one of the reasons the CAB, acting on behalf of large cable network groups including Turner Broadcasting System and MTV Networks, turned down a proposed ad-auction scheme introduced by eBay. CAB president Sean Cunningham, a former ad agency executive, said the eBay system “dumbed down” the process of selling advertising time.
In an age where many ad campaigns thread their way around multiple platforms — including TV, Web sites and related promotional activities — eBay’s system revolved around mechanical presentations of old-school Nielsen rankings and demographics, Cunningham said. “What we saw was an overly simplistic, RFP-style submission set of screens, relegating all of the real reasons things get bought and sold to an afterthought 'comments’ box,” he said. “We never saw from eBay a demonstration on their behalf that they really understood how video-based television is bought and sold, and they never demonstrated to us the ability to listen and respond, to learn along the way.”
A spokesperson for the group of advertisers that had been supporting the eBay trial expressed disappointment at the cable industry’s decision not to embrace the auction platform and said the group would continue to explore options. Broadcast has also passed on the system.
Some participants in the world of Internet-based cable advertising agree that the human touch remains paramount. “There’s nothing that replaces the art of selling,” Spot Runner CEO and co-founder Nick Grouf said. His company’s mission is to leverage the Internet’s efficiencies in a way that makes cable advertising more accessible and affordable for thousands of small businesses that have previously shunned the medium. Many of those businesses have ad budgets that are too small to interest account executives, who can bring in more money by courting larger buyers, Grouf said.
“What Spot Runner does believe is that we can help automate some of these processes, so these salespeople can sort of go after the big-game opportunities that are out there,” he said. The company has developed a program (called “AE Assist”) to help cable sales reps use its spot production and ordering platform to steward portions of their clients’ campaign.
Cable ad executives aren’t exactly rushing to turn their sales processes over to automated platforms. One concern is that the business of selling advertising time hinges on personal factors and creative ideas that are difficult to encapsulate in electronic databases.
“People rarely buy spots. They buy trusted relationships,” said Todd Stewart, corporate vice president of national advertising and sales development for the Charter Communications’ ad sales unit.
Still, some big media companies are warming to the idea of incorporating an outside, automated advertising reservation platform into their business.
In April, broadcaster Clear Channel Radio announced an agreement with Google that lets the Internet company sell ad time on more than 675 Clear Channel stations. The idea is to use Google’s platform to recruit a new cadre of advertisers that could help elevate revenues and improve sellout levels. Clear Channel CEO John Hogan told the Wall Street Journal, “What we’re really focused on is adding additional advertisers.”
But The Media Group’s McAfee said Internet-based ordering might pose a problem for media-buying agencies.
“In an auction system, if you’re the buyer and you submit bids on behalf of your client to 25 networks, and you find out the next morning you got outbid on half of them, do you really want to be the buyer that has to pick up the phone and tell your client half your stuff didn’t run last night?”
The most likely outcome in the near term is that automated spot-ordering platforms could serve to fill up unsold, or “remnant” inventory.
Terri Swartz, director of advanced advertising for the cable advertising technology provider SeaChange International, said cable companies are likely to give Google or other agents license to sell only selected avails.
But she also observed the cable industry movement toward “addressable” advertising — the ability to direct TV spots to precisely defined viewer demographics — seems to mesh with Google’s approach to Internet advertising, in which messages are aligned with user interests.
For now, Swartz said Google — and, by extension, the entire category of Internet-based ad-ordering platforms — is the subject of equal parts intrigue and skepticism. “It’s an area of fascination and terror for my customers,” Swartz said.
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