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HomeMy WebLinkAboutLA Times Handout .r---""") J'~'''''~J._''''''''''~.~ -i~ted ithat further ,...) cuts ! :~~ not linminent. Dt _ .. --- - ~ GET RICHER: Leading U.S. <companies have received grants of ~undreds Of~' dB of dollars 'troll), ,'taxpay ',' [promote goods ~br$d. D8 '" ~ The IRS last'monthmistak- ~lr' cleared the way for lenders to . ~e loans backed by tax re- 'fUJ\tls-refunds that failed to mate- ~te. D8 . .' ~ ~'w ARS: Lobbyists for Du Pont ~'1JOw Chemical jlre at odds over whether 'the federal government Sho~ld encourage fleets to run on 'p'f6Pane. D8 t.. -. -~,~ . ;jI ,~ I ......... r ;i-I PACIFIC ~OX COMEBACK: A decade -after Japanese competitors threat- ~ c ~ to knock Xerox Corp. out of UMJlOpier industry it created, Xe- ~x has scored a comeback. D3 ~ tHIP MAKERS WARNED: U.S. ::rr*de Representative Carla An- :tIerion Hills irked Silicon Valley p.ip'l11akers by. saying they should Jltop complaining that the Japanese -ha'l.en't llvl!d up to a .trade agree- :meQt signed last summer. D3 ~, , ~AJ:IFIC WATCH: A roundup of :business news and trends from :a~~ic Rim nations. D3 i:~LUMNS j\'I~RKET BEAT: California will 1ry,: to sell investors $1.4 billion in ~ew muni bonds this month, while :W~I Street is increasingly worried .41;' t the state's fiscal outlook, ::I'o Petruno writes. D5 " . " J\ttJTUAL FUNDS: Russ Wiles . llxpiitins why the opportune mo- JIlerit to invest in bonds may have p~ed. D5 .,;;:-;, ~'" . ..' i~ ",", j)... THE TICKER Hello, Is This . ' ~s. Goodwrench? :,'FREEHOLD, N.J,~A car <Iea1er is apologizing to Iiundreds of customers who mistakenly were sent a !ilephone sex line number to <:all for repairs instead of a mechanic. , :' Someone at Freehold Auto Group goofed when they typed a letter suggesting owners of 1986, 1987 and 1989 Hyundai E,xcels call an SOO-number and m~\rp;m annointment for free ::h_ Merchantt'Begin,\ I r. to S~ift_~eir.Ad"~ Focus to Cable TV " . . Communications: Technological developments giye, cable sYstems the capacity for broader use of commercials. Local,' advertising is estimated to have risen 21 % I ' I ...- "" ....., ~ ast year. ., I , :': 1"""; ~ .., By JOHN LlPPM~N TIMES STAfF WRITEl ~ t' r- .~ Once. TV time was so costly that a spot buried'in a Godzilla movie on a UHF station at 3 a.m. was all a' local car dealer could afford. Now, thanks to the explosion in cable TV channels, Tony Buttacavoli of Fullerton Dodge is popping up at every click of the remote control. . For $]2,000 per month-his entire ad budget-Buttaca- voli becomes an ubiquitous pitchman. with 30 commercials a:'week-reachlng"87 ,ooo:,catJle-oub&;r1t.~,. ttr Orange County. Sales have soared to ]00 cars per month from 40 since he irtarted a year ago, lie sayS! . ~.... Retalleri from' car dealers to furniture outlets to restaurants are at the forefront of a shift in the way . REGIONAL REPORT advertiSing dollars are being allocated-a switch to local cable ads that does not bode well for traditional media outlets, ,uch as local TV and radlo stations, newspapers and even magazines. Local advertising on cable is estimated to have jumped 21 % to $761 million last year. In 1992, it is expected to increase 19%. Though still a fraction of the $15.4-billion local broadcast advertising pie. cable ads are projected to hit $1,5 billion by 1995 and to continue mushrooming, .. A significant amount of viewership has shifted from broadcast to cable over the last decade:' says Alan McGlade, founder of Ad Link. which places national advertisers on a network of 29 local cable TV systems in the Southland. "The next step, which is already beginning to happen, will be a shift in advertising from broadcast to cable." In La:! Angeles, local cable advertising is expected to Teach $50 million this year, rising at a rate of 15% to 20% annually, And Ad Link is projected to take in an additional $20 million from national advertisers. Until recently, many cable systems did not have the costly equipment needed to run local commercials, though cable networks allocated two to three minutes per hour for local advertisers. Instead, viewers saw promotions for upcoming shows. But thanks to recent technological developments in tape storage and video transmission, many cable systems can. now insert local commercials into 12 different cable networks at the same time. Within a year, cable systems are also expected to begin installing digital commercial equipment that will significantly upgrade the quality of the commercials. "Virtually any system of any size is now selling local advertising:' says Stuart Schley, editor of Cable Avails, a . ,_ __I __LI_ _...I..~..t:"';""<T ;;;j 3/0,;)" '~ ~ L . , I ~ , t", I 1 ~ I I . , ~ , ) ~ . ._...,u. .r......u......... .....:._.... ..........11 O...O......II::>...VJ ...0........';"1,; I '. AD: Retailers AC:~Beginning to Bh-9Time on Cable TY Continued from DI market. Cable systems on average earn lbout 5% of their revenue from ocal advertising, Schley said, but ire aiming to boost that to 20% lYer the next few years. That, he 10tes, will help keep the cost of ,able TV down for subscribers. It will also help spawn better >rogramming, says Patrick Esser, lice president of advertising sales 'or Atlanta-based Cox Cable, "hich operates a 323,OOO-subscrib- !T franchise in San Diego, the argest in the state. Esser notes that the increased ,rices charged local cuble systems 'y ESPN and TNT for certain ;ports programming have been ab- sorbed, in part, by advertising revenues. In San Diego, for in- stance, local ad sales were up 17.4% in I99I-which was widely regarded as the worst year for TV advertising in memory. Cable systems that sell local ,dvertising used to generate annu- l revenues of about $10 per sub- criber, Esser says. Today ,those ystems are generating more than ;16 per subscriber. \ "As cable penetration reaches a aturation point, we need to find ther ways [than signing up new ubscribers] to grow revenues," he ays. e' or the most part, local cable TV [' attracts mom-and-pop retail dvertisers who want to appear on .Ievision but can't afford the rates harged by local broadcasters- ates that can run to thousands of ollars for.a single 3O-second com- 'ercial.~'-' By comparison, local cable sys- .ms charge from $25 to $50 a pop, lthough most advertisers buy ackages that include multiple air- 19S of a commercial over several ifferent cable networks. such as :SPN, CNN, USA Nelwork and jfetime. Cielto Lindo, a Mexican restau- lDt in South El Monte, spends 1,000 a month, for example, to ,"ch about 50,000 cable house- olds in the San Gabriel Valley. he commercials trumpet the res- lUrant's mariachi band and fea- Ire interviews with departing pa- 'ons, much like some ads for lotion pictures. "The commercial sells the music , much as the food," owner Jose ernandez says. "There are a lot of Xld Mexican restaurants around ~re, so we wanted another form of <posur.e:' ' Most of the ~r advertising ~encies steer clear of producing .ble TV commerciaJa, since the lsiness does not yet require the ._.~__:.._ '-__L , Wi 1m . ... (..-.,. ~ I l ~_..y~, MARSHA T. GORMAN / Los Angel~ T1fr CenturY Cable TV shoots commercial for Comfort Sleep Center at its West Los Angeles $i9r. commercials produced for network . television. Indeed, if many of the com mer- ,cials on cable TV look as if they were made with a home video 'C8Jnera, that's because cable sys- tems do not invest a lot of time or money in their production. "You get what you pay for," notes Jack Myers, president of Parasippany, N.J.-based Myers Marketing & Research. Nonetheless, Myers estimates that local cable advertising is the second fastest growing segment of the advertising market, behind place-based media such as the Airport Channel or Checkout Channel, which are beamed to captive audiences in airports and supermarkets. "The';' commercials work be- cause they are basic, hard-sell, comeein~tomorrow_type commer- cials," Myers says. Some small production houses, such as San Clemente-based Larry, Huffman Enterprises, specialize in' low -cost cable TV ads. President Larry Huffman savs cials a year. His clients include the 39th Annual Los Angeles R. V. Show, recreational vehicle dealer Traveland USA and auto dealer Sunset Motors. Huffman does the voice-overs, while his wife, Kathleen, produces and edits the commercials. "We do it out of our home," he says. "It's profitable:' But, the majority of cable TV commercial production is done by the local cable systems them- selves. Most in the Southland have in-house production units staffed with a producer/writer/director, a camera operator and a technician. The frequently amateurish look of local cable ads is one of the most . criticized aspects of the business" along with a paucity 01 empirical data to back up industry claims about cable's effectiveness. Dot DeLorenzo, media director at Kresser Craig, a Santa Monica- based ad agency, says much of the buying and, selling of local cable advertising is done on a ~'atrong gut feeling:' Reaults are measured "in sales. You know the next day .):.... Local cable advertising does" n\ pose an immediate threat to 'bth, local advertising outlets, suclh radio stations or newspapers:.BlJt could present a bigger prOble down the road, says Terry Egge advertising director of Copl, Newspapers, which publiShes tI Outlook in Santa Monica, the Dai: Breeze in Torrance and the U niar Tribune in San Diego. "One area that Is measurable automobile dealer advertisinl where I have seen some budge' atrophy to cable," Egger said. "It going to hit radio hard, and newi papers will also suffer somewhat.' That's good news for Cable Nel works Inc., the advertising arm , Century Cable in West Los Angel es, which produced over 300 com mercials last year. Advertisers i" eluded automobile dealership, restaurants, rug stores, pet shor and even a Santa Monica ma promoting a pooper-scooper of h own invention. "We sell 13 different channels. explains Dena Kaplan, advertisin sales manager for Century Cab" "We can pretty much find sam"