Cable Holds the Line

“Who cares what happens in vegas! Party like you’ve never partied before!”intones John O’Hurley of Dancing With the Stars fame. People jump with joy; confetti streams down around them as jackpot after jackpot gets hit in a Southern California casino.

They’re not the only ones getting excited. The TV campaign is a point of pride for cable operator Charter Communications. It managed to convince the gambling establishment that not only should it widen its TV buy on the company’s Los Angeles system, but it should also allow viewers to press the “A”button on their remotes, and telescope down through a 30-second commercial to a three-minute video explaining that when one member of its players’ club wins, every member in the casino wins–all at the same time.

One campaign led to another; the casino doubled its ad buy on Charter for 2007, and then again in 2008.

Players’ clubs are something that the cable industry can really relate to these days. The top operators in America are all enticing advertisers with a wide variety of interactive opportunities, with the idea that every time one of them wins, they all get to chalk up a small victory in the struggle to prove that they’re finally making good on the interactive promise they’ve been talking about over the last decade.

It’s not hard to see the pressure points driving this trend. The cable companies’ video subscription revenue stream is under attack from satellite and telephone rivals. And though the percentage of U.S. homes with digital cable may be on the rise, the penetration of all cable (analog and digital) households is down, apparently at the expense of satellite growth.

Broadcast-only homes that choose to deal with the country’s transition to digital next year by subscribing to a multichannel provider have two strong alternatives to cable in many markets: satellite or telco services. That makes it all the more imperative that cable operators increase their share of advertising in the overall $25 billion local TV ad pie to more than the current $5.5 billion slice.

What’s more, “the cable companies are motivated by not allowing the same thing that happened with the Internet to happen with advanced addressable TV,”says one agency executive who declined to speak for attribution. He notes that as high-speed Internet subscribers increase their broadband usage, the cost of delivering streams go up for cable operators. But the online advertising opportunity has largely been exploited by Internet-centric companies like Google–a company now extending its advertising reach into TV, mobile and other media.

Providing a more Internet-like experience on TV–with more granular research, targeted campaigns and drill-down experiences–is something cable appears uniquely qualified to deliver. Sure, satellite companies like EchoStar are offering interactive TV ads, but cable’s two-way plant allows for much richer opportunities (mainly through a robust return path from the consumer). And while the telcos can pretty much deliver the same advanced opportunities as cable, they haven’t amassed enough subscribers–yet–to offer a national advertising solution.

Trickles of interactive advertising across the country are forming a river on which the industry hopes to float Project Canoe, a $140 million startup backed by a consortium of the country’s largest operators: Comcast Corp., Time Warner Cable, Cablevision Systems, Cox Communications, Charter and Bright House Networks. Through Canoe, they’re bent on providing advertisers with common technology standards and a one-stop-shopping approach that would allow for national ITV ad campaigns across the U.S. cable universe.

David Verklin, who just stepped down as CEO of Aegis Media, is widely anticipated to be named head of Canoe within a matter of weeks (at this month’s National Cable Show in New Orleans, per chance?). The entity is expected to get a jazzier brand name, and sources say the team Verklin builds is likely to include John Collins, a vp of advanced advertising at Time Warner Cable.