Cable to Fall Short on Advertising Revenue Goals, Pike & Fischer Report Predicts

Despite the rapid progress in advanced interactive advertising over cable networks, the U.S. cable industry is not likely to achieve the level of annual ad revenues that it is expecting over the next several years, Pike & Fischer concludes in a new report.

Cable executives have said they hope to increase advertising revenue from approximately $5 billion generated in 2007 to as much as $15 billion a year once they have completed a standardized, cross-operator platform capable of supporting interactive advertising on a national basis. Much of this effort is being pursued through Canoe Ventures, a joint venture involving top cable operators such as Comcast and Cox Communications.

But P&F chief analyst Tim McElgunn projects that the industry's annual ad revenue will not exceed $10 billion before 2015, meaning cable operators will have to wait a long time to see a significant return on investment.

cElgunn cites several reasons for his forecast, including the daunting task of reshaping age-old advertising tactics, reduced spending by advertisers across all media, competition from online advertising, and the intensive privacy protections that will have to be embedded in the gathering of user data to enable such features as personalized ads.

"Given the immense complexity of first creating such a platform and then using it to disrupt the existing advertising food chain, it will take years and many millions of dollars in capital spending before its impact will be sufficient to allow cable to capture more than a small percentage of total ad spending," McElgunn says.

Pike & Fischer, a BNA company, offers a host of legal and business products covering the telecommunications industry. The report, "Cable Advanced Advertising Market Outlook," is priced at $799 and is available for purchase at www.broadbandadvisoryservices.com. For analyst commentary or to request a briefing, contact Tim McElgunn at 856-751-6723 / tmcelgunn@pf.com.

For information about Pike & Fischer's Broadband Advisory Services, visit www.broadbandadvisoryservices.com or contact Jonathan Wentworth Ping at 973-718-4703 / jping@pf.com.