Cable TV has experienced tremendous growth as an advertising medium because it has some important advantages. Aprimary one is selectivity. Cable subscribers tend to be younger, more affluent, and better educated than nonsubscribers and have greater purchasing power. Moreover, the specialized programming on the various cable networks reaches very specific target markets.
Many advertisers have turned to cable because of the opportunities it offers for narrowcasting, or reaching very specialized markets. For example, MTV is used by advertisers in the United States and many other countries to reach teenagers and young adults. CNBC is now the worldwide leader in business news and reaches a highly educated and affluent audience. ESPN has become synonymous with sports and is very popular among advertisers who want to target men of all ages. As discussed in IMC Perspective 11-3, ESPN has become more than just a 24-hour sports channel and is changing its strategy to attract a broader audience.
Advertisers are also interested in cable because of its low cost and flexibility. Advertising rates on cable programs are much lower than those for the shows on the major networks. Advertising time on network shows can cost two to three times as much on a cost-per-thousand basis in some time periods.25 Spot advertising is also considerably cheaper on most cable stations, while local cable is the most affordable television advertising vehicle available. This makes TV a much more viable media option for smaller advertisers with limited budgets and those interested in targeting their commercials to a well-defined target audience. Also, cable advertisers generally do not have to make the large up-front commitments, which may be as much as a year in advance, the networks require.
The low costs of cable make it a very popular advertising medium among local advertisers. Car dealers, furniture stores, restaurants, and many other merchants are switching advertising spending from traditional media such as radio, newspapers, and even magazines to take advantage of the low rates of local cable channels. Local cable advertising is one of the fastest-growing segments of the advertising market, and cable systems are increasing the percentage of revenue they earn from local advertising.