Cable in Ad Sales Driver’s Seat

MagnaGlobal forecasts 11% gain in revenues

Everything’s coming up roses for the cable TV networks, as a once thorny ad sales market promises to be particularly sweet smelling in 2011.

According to IPG’s MagnaGlobal, the national cable networks will boost their advertising dollars by 10.8 percent this year. Based on estimates from the Cabletelevision Advertising Bureau, that jump would bring cable’s overall ad sales haul to a whopping $22.7 billion.

While the upfront isn’t a perfect indicator of the general strength of the market, the total year increase predicted by MagnaGlobal echoes Tabak & Co.’s forecast for the spring sell-off. Cable nets are expected to grow their upfront commitments by 11.5 percent, for a grand total of some $8.9 billion.

Cable’s forecast is extremely favorable when compared with the advertising industry as a whole. MagnaGlobal is now forecasting a 3.1 percent boost across all media. Cable is also on track to post much higher gains than the broadcasters, as the agency predicts a 2.4 percent lift at ABC, CBS, NBC, Fox, and The CW.

“Increasingly, large advertisers with reach and frequency goals are turning to network cable as an alternative national mass medium to broadcast TV, attracted by lower rates and broader options,” the MagnaGlobal report said. “We see a similar trend in 2011, in which large, national advertisers continue to shift dollars to cable.”

If cable is flexing its muscles heading into the 2011-12 upfront bazaar, the industry as a whole still lags broadcast on price. Estimates place the average cost of a 30-second spot in broadcast prime at around $130,000; on the whole, cable nets command an average rate of around $45,000. (Ratings leaders and networks with more aggressive pricing packages are much closer to bridging that 3-to-1 shortfall.)

Spurred by opportunities in online and mobile video as well as display advertising, MagnaGlobal sees national digital advertising growing 18.7 percent in 2011.

Weakness in several key economic indicators could bring a slowdown in the second half of 2011. Last week, the International Monetary Fund reduced its estimate for U.S. GDP growth in 2011 to 2.8 percent.