The cable TV industry relies on many factors — most out of its control — to continue to grow and succeed. The decision to cancel or move forward with live broadcasts of college and professional sports, for instance, has a direct impact on one of the industry’s main revenue streams: advertising.
However, it has proven to be one of the most resilient mediums in the ad industry, bouncing back in 2021 faster and stronger than anyone expected after the hits that every type of advertising endured in 2020. Over the next several years, IBISWorld anticipates a slight growth trajectory for the cable industry, too, despite changes in viewing habits and increased competition from streaming. This resilience is primarily due to companies’ reliance on local cable TV advertising to target key customer bases.
If you’re worried that investing in local cable TV ads isn’t what the “cool kids” are doing anymore, let us assuage your fears. Nearly every industry — including automotive, healthcare, education, retail, entertainment, travel, and even sports betting — utilizes local advertising to share their message with consumers in their preferred markets. The question should not be if you should try cable TV advertising, but how. A significant component in the cost of this ad channel is your ability to negotiate with a network.
No price is ever set in stone, so it’s always possible to get a good deal — if you play your cards right, that is. Below, we’ll walk you through what you need to know in order to haggle with the best of them.
Markets & Channels
Before you even jump into negotiations, you need to know who exactly to negotiate with. In the US, TV advertising is broken down into designated market areas (DMAs) — a term coined by Nielsen — but you’ll also see the term television market area (TMA), which is what the Federal Communications Commission (FCC) calls them. Nonetheless, you need to identify which media markets you want to target. Once you know your markets, you can analyze specific datasets and research for these areas, and start planning how you structure your ad campaign.
Within markets, TV stations are your avenue to reaching your audience. Cable channels offer niche programming that can aid a business in targeting a specific customer demographic. In addition, cable operators should provide you with specific demographic information that can inform your decisions moving forward. For example, if you want to reach stay-at-home moms, you’ll need to research which channels and which times of the day will be the best options for airing your ads.
The cable channel(s) you select will affect your negotiating position. You can expect a premium channel that reaches more households to be more competitive, more expensive, and less negotiable than a niche channel with fewer total viewers. Consider carefully where you’ll get the most bang for your buck.
Spot Vs. Network
Local cable TV advertising can be broken down into two categories: network and spot.
Network: A network ad buy puts your ad on a national cable channel such as Fox News or ESPN, allowing you to reach your audience at a national level. While it may be a bit more expensive, it also comes with more reach than spot advertising.
Spot: This is the purchasing of commercial time on local cable systems within a specific DMA or geographic area. For smaller businesses, spot advertising is typically within budget (though costs vary widely depending on the market you’re in).
One thing to note, especially regarding spot ads, are interconnects. This is when two or more cable systems are “connected” together in order to reach audiences in a wider geographic area. Interconnects can be a great value, maximizing your reach without forcing you to buy commercial time for the entire DMA region.
Ad Rates
This probably isn’t a huge surprise, but overall, cable is much cheaper than broadcast TV. Whereas you could drop a few thousand dollars to air an ad on a broadcast station during primetime in a medium-sized market, an equivalent spot on a cable station will only cost you a few hundred dollars. The cost of local cable TV advertising still varies widely, though; the cost per one thousand viewers (CPM) for cable was $19.45 on average in 2020, but ad rates can be as low as a few dollars or as high as several thousand dollars depending on location, number of commercials, duration of the spot and channel.
For instance, in which scenario will it be easiest to negotiate a reasonable rate:
A year-long package of commercials on a niche channel in a rural market, or
A month-long package of commercials on a premium channel in a larger market
If you picked A, you’re correct. While you likely won’t have the perfect circumstances working for you all the time, it will still be advantageous for you to consider all of these factors when negotiating with networks. Of course, other outside forces could also impact your ad rates, such as political elections or major sports events, so keep those on your radar, too.
The Art of Negotiating
In the world of local cable TV advertising, few media buys are made at published rates. You should always expect to negotiate, even if you ultimately can’t move the needle that much. Here are some pointers:
The likelihood of negotiating a lower rate increase as market size decreases. Consider who your competition is in the market and whether they’ll be vying for the same spots you want.
If a cable system has open commercial slots, they’ll be eager to fill them, so naturally, expect rates to fall. Make sure to inquire about any available inventory. The only issue is that they may not be commercial slots you necessarily want.
The later the hour, the less expensive spots will become, although this is usually because fewer people are awake to watch. However, if you’re marketing a cure for insomnia, you’re in luck.
To get the best deals, think in terms of packages instead of individual buys. Not only is your audience’s repeated exposure to your message important for the success of your campaign, offering to purchase several spots spanning several months into the future will make the network happy. Happy networks mean lower ad rates.
The best deal for you may not be the cheapest deal overall. But, at the end of the day, your ad should air during times you feel your customer base will be most likely to see it.
The Ward Group’s Wheelers & Dealers
Whether you’re dealing with local TV ads or intergalactic radio (which we predict to be a huge market someday), media negotiation is not a simple process. It involves the curation of strong working relationships and a headache-inducing amount of audience research to be effective. To make sure that you are receiving the best value, sticking to your ad budget, and reaching the right audience with your message, the most cost-effective option is typically to hire an agency familiar with this process.
The Ward Group knows our way around the media market. After over three decades of working in the industry, we’ve built enduring relationships with key players and developed a reputation as loyal media partners. So not only do we know the ins and outs of market research, our media stewards will come to every negotiation bolstered by a wealth of valuable experience.
We’d love to help you get started on your local cable TV advertising campaign. Our planners and buyers will work with you from beginning to end to ensure you get the absolute greatest bang for your advertising buck. Contact us today to get started!