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Monday, August 23, 2010

CNN's Seismic Shift

Network is the first to make away-from-home deal

Although this article, written by Anthony Crupi and published yesterday in MediaWeek,wasn't written for the casual CNN viewer it does offer a glimpse into how CNN generates revenue.

After having taken the unprecedented step of offering guarantees against away-from-home deliveries, CNN’s ad sales team has closed its first such agency deal, coming to terms on a multiclient agreement with Starcom. Completed during the 2010-11 upfront, the pact marks the first time a network has written business based on its deliveries in bars, restaurants, hotels and third-party residences.

The clients on Starcom’s roster that agreed to credit CNN’s away-from-home performance are Allstate, DeVry, Kellogg’s, Sears Optical and Walgreens.

Greg D’Alba, evp and chief operating officer of CNN advertising sales, began pitching media buyers the away-from-home offer early in this year’s upfront. “For so many years the out-of-home consumption of our brand hasn’t been measured by Nielsen,” D’Alba said, adding that data culled from Arbitron’s ARB-TV service shows that outside venues provide “a consistent bump in our viewership.”

According to Arbitron data, away-from-home viewing in the second quarter gave CNN a 28 percent lift in the core news demo (adults 25-54), while boosting the network’s delivery of viewers 18-49 by 30 percent. Predictably enough, the lift for the younger demo was amplified, as CNN’s overall reach among viewers 18-34 grew 44 percent.

Along with the obvious benefits of making some noise about its nontraditional deliveries, the away-from-home pitch helps divert attention from CNN’s ongoing linear ratings slide. The network’s prime-time struggles have been well chronicled, and CNN this fall faces the additional challenge of launching a wholly revamped lineup between 8-10 p.m. (In June, CNN tapped former New York governor Eliot Spitzer and syndicated columnist Kathleen Parker as co-hosts of a nightly 8 p.m. roundtable program. A week later, Larry King said he was stepping down after 25 years; the network is working to finalize a deal to bring on Piers Morgan to helm the 9 p.m. hour.)

In the three-month period in which CNN enjoyed a lift from away-from-home deliveries, the news on the linear side remained bleak. CNN in Q2 fell 31 percent in prime, averaging 596,000 viewers. The news demo was down 27 percent to 175,000, falling short of Fox News Channel’s 473,000 and MSNBC’s 240,000.

“The value proposition for all clients is the scale and reach of a particular brand,” D’Alba said. “Yes, ratings points matter, but you also have to make sure you’re reaching your users no matter where they are.”

Starcom president, chief operating officer Chris Boothe said he’s satisfied with the Arbitron data, which is drawn from a sample of 30,242 respondents in 11 major markets. “It’s certainly not perfect, but it’s a first step of many steps toward tying accountability to this,” Boothe said. “Our research folks have complete confidence in the methodology.”

To date, Arbitron has not sought accreditation from the Media Rating Council for its ARB-TV service.

Pricing for the deals was uniform; Starcom did not negotiate different CPMs for CNN’s in-home and away-from-home deliveries. “We don’t see any downside to doing this,” said Christine Olson, vp, cable activation director, Starcom. “Arbitron provides the additional data that allows us to understand what’s happening outside the home. It just made sense for us to be the first to do this.”

While the Starcom-CNN alliance is a preliminary step toward monetizing away-from-home viewing, the news net continues to rake in the dollars with its linear sales. According to Time Warner evp and COO John Martin, CNN and Headline News in Q2 posted double-digit ad sales gains, on a percentile basis. Together, the networks in 2009 earned $496.1 million in net ad revenue, per SNL Kagan.

“A lot of business was fueled by Detroit’s resurgence,” D’Alba said. “Scatter’s still healthy; we’ll see where the economy takes us over the next six months or so.”

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Anonymous said...

CNN is way ahead of everyone else in this game.
I posted here before that CNN is not losing money.
If you just look at the 25-54 demo, you are missing
a lot there are several demos and the ratings posted
on blogs don't tell the full story. All networks be
they the big 4 or cable will have to monetize. If
they don't they will be history. Now that we are
a global economy you can only guess the number
of ad buyers who want to advertise on CNN I.It is
a myth that CNN can't make any money because
of the drop in prime time ratings. I would be
willing to bet 360 helps a lot in the demo with
those 18-34 yr olds and 18-49 yr olds.
Young people like real news.

Anonymous said...

It is interesting how networks are reacting to
the changes that will be coming.CNN is pushing
dvr and MSNBC is pushing Flo TV. Plus you can
no longer ignore internet viewing. Mobile devices
and dvr's change everything.