Market Research - Topical Reports & Briefs

The cable industry hopes to increase its advertising revenue to as much as $15 billion a year once it has effectively deployed standardized advanced advertising technology capable of supporting addressable, interactive advertising on a wide scale. A number of the largest cable MSOs have invested in Canoe Ventures, a joint venture focused on the development of advanced advertising capabilities to enable marketers to reach very specific subsets of viewers with their messages. But the ultimate value of theinvestments in these advertising technologies will be significantly less than the industry is hoping. In this detailed analysis we examine cable’s new advertising initiatives, and provide a forecast of advertising revenue growth over the next five years.

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Introduction
The Opportunity: Canoe Ventures
Enabling Technology: Standards; - Digital Ad Insertion; - Interactivity; - Reporting; - Addressability; - Status of Advanced Advertising Standards
Challenges: Competition for Cable Advertising
Outlook and Forecast
Also from Pike & Fischer
About Pike & Fischer’s Broadband Advisory Services
TABLE OF FIGURES
Figure 1: U.S. Cable MSO Advertising Revenue 2003 – 2008 (e)
Figure 2: VOD as % of Total Monthly TV Viewing Time, per Household
Figure 3: U.S. Cable MSO Advertising Revenue Forecast 2008 – 2013

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FOR IMMEDIATE RELEASE

Cable to Fall Short on Advertising Revenue Goals, Report Predicts

Silver Spring, MD—Despite the rapid progress in advanced interactive advertising over cable networks, the U.S. cable industry is not likely to achieve the level of annual ad revenues that it is expecting over the next several years, Pike & Fischer concludes in a new report.

Cable executives have said they hope to increase advertising revenue from the 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 top cable operators such as Comcast and Cox Communications.

But P&F chief analyst Tim McElgunn projects that the industry’s annual ad revenue will not exceed $10 billion before 2015, meaning cable operators will have to wait a long time to see a significant return on investment.

McElgunn cites several reasons for his forecast, including the daunting 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, offers a host of legal and business products covering the telecommunications industry. The report, Cable Advanced Advertising Market Outlook, is priced at $799 and is available for purchase at www.broadbandadvisoryservices.com. For analyst commentary or to request a briefing, contact Tim McElgunn at 856-751-6723 / tmcelgunn@pf.com.

For information about Pike & Fischer’s Broadband Advisory Services, visit www.broadbandadvisoryservices.com or contact Jonathan Wentworth Ping at 973-718-4703 / jping@pf.com.

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Tim McElgunn

Tim McElgunn, our Chief Analyst, has more than 20 years of experience and expertise in market sizing, forecasting, segmentation and share analysis in emerging and legacy segments of the telecommunications industry. He focuses on the business strategies and competitive status of U.S. cable companies, telephone companies, satellite TV providers and broadband-enabled application providers such as Google, Yahoo and Microsoft. Before joining BAS in November 2006, Tim headed up U.S. consumer broadband analysis for eight years at Stratecast, a division of Frost & Sullivan. He also held senior analyst positions at both Datapro/NBI and Gartner Dataquest. Contact Tim at 856-751-6723 / tmcelgunn@pf.com.

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