AN AD AIRING ON CABLE TELEVISION these days stars burly male executives in drag. Teetering on high heels, they are forced by their boss to spend the night soliciting customers to "earn back money unwisely spent on publicity." The moral? If you don't take out commercials on cable television, justifying your ad budget could lead to drastic measures.
As Argentina enters its third year of an economic recession, many firms are getting the message. In spite of budget cutbacks, companies are turning to pay TV because air time is much cheaper than on regular broadcast stations and cable watchers have deeper pockets. About 83% of homes with cable fall into the coveted slot of upscale consumers, according to the pollster Ibope.
"Advertisers are realizing that the population they reach through cable is composed of active consumers, while people who can't afford cable also can't afford what they are selling--be it cellular phones, banks or whatever," says Horacio Gennari, general director of the Business Bureau, which conducts market research on the cable industry in Argentina.
With two-thirds of households boasting cable TV--the highest rate of cable penetration in the world after the United States and Canada--Argentina is ripe for advertising growth on its more than 60 cable channels. Pay TV is more prevalent here than other countries because the law restricts the five major broadcast television networks to a 100-kilometer (60-mile) radius from their studios. Industry analysts predict the trend of increased advertising dollars on cable television will spread as pay TV penetration grows throughout Latin America.
"Clearly this is something we will be seeing throughout the region," says Mary Pittelli, president of Maryland-based Television Association of Programmers (TAP), which represents 27 cable networks in Latin America and the Caribbean. "Those who watch cable have higher salaries, educational levels and discretionary income. So it is a much more efficient and effective way for advertisers to buy."
Addictive ads. In Argentina, a second of air time on broadcast television ranges from US$7 to $300 depending on the time slot. Cable prices, on the other hand, begin at 50 cents a second and climb to about $15 a second, "What we have seen in Latin America is similar to what happened in the U.S.A., where media investments were initially slow to migrate to cable," says John Holmes, president of Latin America and the Caribbean for the advertising firm J. Walter Thompson. "You see more investment in cable as economies get tougher and spending declines."
While income from advertising in broadcast television in Buenos Aires fell 7.4% from 1999 to 2000, cable ad dollars increased 7.5% during the same period, according to Monitor de Medios Publicitarios, an industry group.
The industry's Bureau for Publicity on Cable in Buenos Aires, which sponsored the commercial with the cross-dressing executives, pegs the growth of advertising income even highter--12% in 2000. "We have never had advertisers venture into cable and then abandon it. They stay because it really pays off," says Carmen Martinez, the bureau's president.
As cable ads increase, most broadcast stations are operating in the red. Total advertising sales were down $150 million in 2000 compared a year ago. In 2001, industry insiders say the advertising season is already off to a sluggish start. "Monthly losses on a metropolitan channel, depending on how you figure it. can vary between $1.5 million and $3 million a month," notes Prensario, a monthly magazine that follows television trends.
To be sure, broadcast television still receives the lion's share of ad dollars in Argentina, earning $1.4 billion compared to $482 million on cable television last year, according to Monitor de Medios Publicitarios, "Cable television will never replace broadcast TV in effectiveness as far as publicity:' says Miriam Garrone, head of market research for Channel 13, one of the few broadcast channels breaking even. "With one ad on broadcast television you would have to air 20 on cable TV to get the same exposure.
Garrone points out that an excellent rating for a cable program is 1.7 points- the equivalent of some 170,000 viewers- while a popular broadcast show would likely register eight times that amount. "Cable television has matured in terms of publicity, but it will always be part of a bigger multimedia package, she says.
Indeed, cable operators acknowledge that they will never generate the kind of advertising revenue attracted by their competitors. "Traditional broadcast will still have a bigger piece of the pie but it will be a smaller piece than before," says TAP'S Pitteili.