The Little System That Could Sell Ads

Cable World,  March 17, 2003  

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Byline: K. C. NEEL

With a little more than 59,000 basic customers, Cox Communications' Roanoke, Va., system is hardly among its bigger operations. But that hasn't stopped the ad sales department from being one of the MSO's top performers.

Indeed, the Roanoke ad sales team, headed by Cox Media GM of ad sales Tim Morgan, took home several internal awards last month. The system was honored for its innovation, revenue generation and operating cash flow growth in 2002, and Morgan says things are looking strong this year as well.

Halfway between New York and Atlanta, Roanoke is smack in the center of one of Virginia's largest metropolitan regions. The 400,000-home DMA is composed of 25 counties, but most of the businesses and residents are in Roanoke. In addition to Cox - which passes some 85,000 homes in Roanoke - Adelphia, Charter and local operator Nesbe Cable serve customers in the surrounding DMA.

Selling advertising in the entire market is difficult because it's so spread out. What's more, there's no hard interconnect, although Cox represents Charter's systems that count about 29,000 customers with its ad avails, Morgan says. Adelphia and Cox are both represented by NCC, the national cable advertising rep firm, and the two operators have been known to jointly craft advertising proposals on occasion. But normally, advertisers must deal separately with the operators if they want to buy avails for the entire area.

That doesn't bother Mike Coyle, GM of Goodman Honda in Roanoke. Coyle spends about half of his $25,000 a month ad budget with Cox and is thrilled with the results. He says he'd like to run his ads on Adelphia's system but has had nothing but problems with the system and quit buying their spots long ago.

"They have had a lot of trouble running our spots," Coyle says of Adelphia. "Many of our promotions are time sensitive, and you can't have an ad promoting 2.9% financing that expires on the 25th running on the 29th. We've never had that kind of problem with Cox. In fact, they have been very flexible and reliable with what we want. And our numbers have increased since we began running ads on Cox's system, so we're very pleased. When all of Adelphia's problems became public last year, we were hoping that Cox would buy the system, but so far that hasn't happened."

Goodman Honda gave up on newspaper and radio ads, using funds once allocated for those media outlets to bulk up on its local cable spots. The locally owned dealer, which sells about 120 cars a month, runs spots three weekends a month. Coyle says the heavy rotation averages one 30-second spot an hour between 4 p.m. and midnight on seven networks that skew toward women.

"Honda is big with women, so we concentrate on networks that women watch," he says, noting that value-added additions to the rotation may push the number of inserted channels to as many as 14 networks at times. "We're good to them and they're good to us."

The bulk of Cox's advertising is local, Morgan says, but the system is aiming for more regional and national sales, especially now that it's revamped its focus as a media outlet, not just a cable one. Morgan hopes to begin selling more specific programs, as the broadcasters have been doing for years, and begin charging more for marquee shows.

"We need to begin selling more according to ratings, as the broadcasters do," Morgan says. "Cable ratings have gone up significantly, but our rates haven't. That has to change."

Eventually, the system hopes to begin selling advertising spots on its digital networks as well as on Cox's high-speed data service. Those services are being rolled out in some of Cox's larger markets now, Morgan says. It's just a matter of time before the company's smaller operations launch such offerings.

"We're going to become more sophisticated in terms of how and what we sell," Morgan says. "In many cases, that might mean taking on broadcast head-to-head in terms of CPMs. Our goal is to become the No. 1 billing entity in the market, and the only way we can do that is with a mind-shift change. If we can begin to catch up with billing as it relates to ratings, we'll succeed."

Cox is reworking its ad sales matrix, now incorporating local cost per thousand data with the system's current demographic information. The average CPM in Roanoke is around $66 per spot, with prime-time avails garnering $120 and early-morning avails fetching about $44, according to SQAD (Service Quality Analytics Data) Inc., which compiles local ad sales data from A.C. Nielsen-metered markets.

The push toward regional and national ad revenue is part of Cox's companywide effort to revamp its ad sales arm. The unit, which was called CableRep, is now referred to as Cox Media. The new name reflects the fact that Cox isn't just a cable company anymore, Morgan says, adding that Cox also wanted to build on its national brand recognition.

The name change is supposed to help communicate to advertisers and media buyers that Cox Media has an array of advanced services, such as in-depth research tools, direct mail, customer promotions and state-of-the-art commercial production. Cox's Roanoke system sells about 3,800 avails a day across 40 channels right now. But Morgan hopes to begin inserting ads on the system's digital channels and high-speed data network soon.