Cable TV ad rep firm Viamedia made its way into the business in an unorthodox way, by striking alliances with non-traditional video service providers like SureWest and Frontier Communications to sell local TV advertising inventory.
But the Lexington, Ky. company has discovered one key to growth is an entrenched staple of the business: cross-channel promotion for a video provider’s own products.
According to Jack Olson, VP Business Development, the ability to use television spots to sell cable customers more cable products – think high-speed Internet, digital voice and more – has been instrumental in convincing upstart video providers to get into the ad-sales game.
Most incumbent cable companies devote a large share of local ad inventory to their own products, with many reserving 20-25% of ad slots for cross-channel promotion. The theory isn’t any different for newcomers, as Olson says new video entrants like telephone companies, municipal broadband providers and others see similar value in using network-provided ad avails to persuade customers to maintain or upgrade their services in highly competitive video markets.
That realization has been helpful for Viamedia, whose growth depends in part on getting more providers to launch local ad-sales operations that require investments in insertion systems. Often, the desire to use TV ad inventory to upsell customers is reason enough to launch an ad insertion operation. Later, as providers add enough subscribers to present a sizable market for local advertising, paid advertising revenues follow. Viamedia typically works with affiliates to establish a 36-channel ad insertion operation that creates ample inventory for product promotion. “In our proposals, we really emphasize that (cross-promotion) value,” says Olson, who previously ran ad sales operations for Adelphia Communications.
Olson’s current focus is the rising market for small (5,000 to 10,000-subscriber) pay-TV systems launched by telco, municipal and energy companies. In aggregate these providers can produce a significant pool of customers that Viamedia represents to advertisers through regional sales offices it maintains. (Viamedia also represents some bigger players in the business, including Verizon’s FiOS TV and Time Warner Cable in some markets.)
Although cross-promo opportunities help make the case, Olson says Viamedia still thinks there’s room for improvement in the capex ratios tied to local ad insertion systems. Viamedia is working with technology vendors to come up with new approaches for reducing small-system ad insertion capital requirements, Olson says.
Also new for Viamedia: a first-ever network representation deal, involving the newly launched U.S. Hispanic cable channel TVC+Latino. The channel offers sports and entertainment content from Mexican cable programmer TVC Networks as well as U.S.-produced content. Affiliates include Verizon’s FiOS TV, AT&T’s U-verse, Mediacom Communications and Comcast, plus over-the-air TV stations in New York, Chicago, Los Angeles, Dallas and Fresno, Calif.
Even though TVC+Latino has national distribution aspirations, the rep arrangement with Viamedia makes sense because TVC+Latino’s rollout strategy involves a phased approach targeting specific local TV markets, particularly in the southwestern U.S.
As the network’s exclusive ad-sales representative, Viamedia will work on a market-by-market basis to woo local advertisers as the channel rolls out. From a centralized advertising insertion facility in San Bernardino, Calif., TVC+Latino is able to insert commercials corresponding to local markets where the network is available. That plays into Viamedia’s expertise in calling on local TV advertisers, Olson says.