Quiet No Longer
Is Cable Advertising Right For Your Strategic Marketing Efforts?
Colette A. Weil, MBA
Do you hear the rumble in the market? It’s a low, rolling roar, like the sound of an earthquake approaching. That’s the sound of independent HME providers shaking their shoulders, shaking off “that’s the way it’s been done”, shaking off their quiet demeanor. They can’t afford to be quiet any longer. For years, providers prided themselves as quiet, silent professionals in the background of every community. The stalwarts in the system, they put up with attacks on their credibility, supporting the health care system to enable low cost home care alternatives to hospital care.
But the current has been changing for awhile and providers are bracing for even more shocks. Many providers are taking the face of their business into their own hands, not letting others say who they are. They guide the branding and visibility in their communities to influence stakeholders that they are the HME provider of choice, respected and dedicated. They are preparing for change with strategic marketing plans to launch new business segments, expand retail, make acquisitions, expand geographically, build new alliances, drive community and consumer brand visibility, or prepare for sale.
Whatever the strategic direction, providers must also have a defined methodology for implementation. Advertising is one of the tools used. As the HME industry increases in marketing savvy, provider expenditures in advertising alone will run 2 to 6 percent of revenues. Businesses invest in cable advertising to target local geographic and demographics areas. Cable now commands 84% of all TV viewers, with viewers turning to cable programming more often that the major networks.
Too Expensive?
Many businesses are under the impression that cable television advertising is too expensive. Not true. In my area, the fifth largest cable market in the nation, cable advertising can cost as little as $6 for a daytime spot on Fox News Channel with strong over 55 audiences to $96 a spot for CNN’s Larry King 6 pm slot. Providers must ask themselves, “Is this visibility on target for my business objectives? Am I reaching a large enough pool of prospects and is this the type of programming my customers would watch? How will I track and measure the cost per lead and conversion to customer?”
Think of the credibility you achieve when your business is seen during a recognized, entertaining time slot in your community. You can target your message to a specific geographic area or cable “zone” on programs that fit your demographic audience. A zone could be a county such Contra Costa, CA of 141,000 cable households or 14,000 in Washington, Iowa. There is not a doubt that cable advertising is less expensive in more rural areas. But to reach a specific geographic and demographic audience in a larger community served by a local business can still be very cost effective.
James Kempthorne, American Home Care, Riverside, CA, started cable advertising a few years ago. “We started from the HME perspective that we are retailers. We are referral and retail based, and it was imperative we build our name and services to our community.” His firm advertises on 3 cable systems and runs 3-10 spots a week. American Home Care’s marketing all works together and includes collateral, print advertising, direct mail, yellow pages, education, and newsletter insertions. But sixty percent of his marketing budget is in cable. “Cable gives us the ability to achieve our objectives and target specific demographic and geographic areas through the zones and programming. We are in total control of our message. No other medium has had customers coming in to our store saying they saw our ad.”
Ken Gould, Gould’s Discount Medical, Louisville, KY, has two large, modern HME locations. Significantly fewer people would know if he hadn’t started cable advertising. Gould runs 10 spots a day and his objectives were clear. “We are different than the average DME. Our goal is to build our brand and name recognition in the community. We communicate that we have exceptional personal service and extensive retail selection to build retail sales and referral business.” Gould has been advertising on cable in addition to network advertising. “We have achieved a positive combination of cable, some network, print, in-services, and day events. Our efforts have built name recognition among consumers and referral sources and significantly stimulated retail walk–in traffic to generate revenue growth of over 30% a year for the past five years.”
The Commercial
I don’t want you to think you’ve been led down a path on how inexpensive cable can be. There still is the commercial to produce. And this can very quickly wrap up your company ego and wallet in a knot. Talk with manufacturers about cooperative advertising funds if you will be featuring their products. Manufacturers such as Pride Mobility have a vast selection of 30 and 60 second commercials ready to go. They will also assist in producing a commercial, developing the media plan, and placing the media order.
Talk with the cable company about alternatives. They will walk you through how to approach the ad, produce a spot that is reasonably priced and also recommend local production companies you might want to consider. Production costs are different in every area, but seem to run from $500 for a “basic” commercial to $2,500, the average around $1,500. For instance, Comcast North Bay, CA offers a $1200 basic production package that includes three hours pre-production, three hours filming and four hours post production. Kempthorne spent $800-$1,000 per commercial, and he carefully scripted and guided production.
Kent Bjugstad, Comcast Manager, North Bay Region, CA, explains “After we thoroughly understand the client’s marketing objectives, their customers, key marketing channels and revenue objectives, we can advise on whether cable could be right for their strategy. As marketing partners, we want our clients to be successful in the use of cable. We provide complete production services and can also recommend other companies, along with identifying whether coop funds are available from manufacturers in their industry.”
Community Medical Supply, Washington, Iowa, produced five commercials. The production was part of the media commitment. Owner, Pat Smith, started cable advertising five years ago when the local cable operator made a presentation to the Chamber of Commerce. The deal was buy 300 spots on 9 networks for $300 a month, production included. Smith has been amazed by the success of cable and continues the investment. “We started cable advertising to build name recognition. We’re in a more rural area with lots of independent businesses, and cable spots are still reasonable. When the cable zones expanded and our ads were reaching a broader geographic area, so did our business. We opened another location to meet demand.”
Smith admits that home health care is just not top on people’s minds. “Nobody needs to know our name until they have a home health need. And now they think of us. We had been advertising on radio and in newspaper. Not a single customer ever came in and said they read or heard about us. Store traffic was non-existent. When we started advertising on cable, customers came in and told us they found out about us on TV. Now we have window shoppers and may have 5-6 customers or more in the store at a time. We continue to grow 10-20% annually. The last 6 months, we’ve grown 28%.”
Watch cable channels for local business commercials. Many feature the customers, key products and services, the owner and staff, and business location. Felicia Kaminker, Comcast Account Executive advises, “If you use a manufacturer’s prepared commercial, make sure you can run your company’s tag continuously along the bottom of the ad, and open and close the ad with your personalization.” Bjugstad adds, “Your message and visual should communicate compelling, differentiating information about your business, and ASK for the order with a call to action on the part of the viewer.”
Frequency and Targeted Reach are King and Queen
The beauty of cable is you can target your geographic area and specific audiences. You can determine communities, networks, programs and times slots that are best to reach your audience based on household income, age range, male/female viewership, education and home ownership. But you can not run the commercial one time and expect a response. Just as you can not make one sales call and expect to close (although it does happen), or send out one brochure, or send out one direct mailer. Advertising needs to be run with frequency or enough spots to say your message over and over and over.
Repetition is key. Remember, with a monthly commitment, your company could run 30-second commercials for as little as $5, $10, or $20 a spot. Cable rates are negotiable. What is the optimum number of spots? It depends on your marketing objectives, area, competition, ability to get the right eyeballs watching your commercial, programming selection and budget. Consider the goal of reaching the same people per week, at the same times, on the right channels, with the same message. From around the country, HME providers run 3 spots a week to 150 spots or more a week.
Kempthorne initially used canned manufacturer commercials. He did not get the results he wanted and proceeded to take the face of his company in his hands. He wrote, directed and guided the production of his commercials, using three cable systems, Adelphia, Charter Communications and ATT to cover three – four cable zones. “We’ve done everything - New products, holiday, gift, and company branding commercials. We not only target over 55 adults, but also women 35+ to reach family members and daughters of parents in need of care. Spots at $8-10 are a bargain. Now its $25-50 a spot, focusing on 3 networks, running up to 10 spots a week, investing from $20,000 - $50,000 a year.”
Also, remember your local cable community channel. You might be able to host your own show, or have a special feature on your business, or feature a specialized service such as diabetes care, asthma care or mastectomy services. Also, a local cable channel might be a good way to list a local event such as a new store opening, health fair or seminar.
Marketing Return on Investment (MROI)
The return on your marketing investment to meet your objectives is the bottom line. However, the challenge with cable advertising, if done right, is that it’s working in conjunction with other marketing tools such as print, in-services, fairs, etc. to achieve your strategic objectives. Due to the cumulative effect of advertising with other methods, many businesses monitor the revenue increase in specific product categories, or business overall, in addition to anecdotal feedback.
However, establishing relative metrics will assist in the basis for understanding customer value as well as the cost to acquire the new customer. It will help you measure, refine and optimize your marketing mix. For instance, if running cable advertising for a new product or service, set up a separate 800 number to field inquiries that become leads, or provide a specific piece of educational information, or another incentive for the viewer to take action. Additionally, require employees to ask and log the venerable question, how did you hear about x, or use a call center. Then track the leads to determine conversion to sales or new business. Therein lies the internal challenge – tracking and determining the cost per lead as compared to other marketing methods you use or could use. However, measurement will assist in assessing the marketing costs to acquire the customer using a particular tool such as cable advertising. You are in a better long term position to make trade off decisions in your marketing investments.
Follow-through is crucial to cable advertising success. Service and customer satisfaction must deliver on what you portray in the commercial. Gould emphasizes, “Personalize your message. Stay with cable. You won’t see an immediate response. And deliver on everything you say in your commercial and more.”
Some providers as Smith of Community Medical Supply did see immediate results. But generally, results are seen over a few weeks to the first few months. Providers have sustained double digit revenue growth with cable advertising in their marketing mix. And the result is a change in their investment in other tools to further expand their business. Kempthorne describes his return on his investment. “Cable is integral to our strategy. We’ve achieved strong measurable results in new business growth. But rates are increasing and we will also examine radio to consolidate our geographic reach.”
Assess Cable for Yourself
No matter what size your business; assess cable to determine if it is a tool to help accomplish your strategic objectives. Be pragmatic and define measures for this business investment. Combine advertising with other programs to work collaboratively to drive market impact and build increased revenue and profitability. Show the community your voice, your service, your professionalism. Don’t be quiet any longer.
Getting Started
- Take the strategic direction test.
Does your community know what services you provide? Should they?
Are you an HME Retailer, targeting specific markets?
Has your retail business faced increasing competition and new market entrants?
Should you be building your brand and differentiated services to the public?
Are you launching new programs and products that set you apart from your competition?
Are there components of your business that are “discretionary purchases” and are experiencing industry growth, but your firm is not?
Are you thinking about selling your business in the future and is your brand distinctive, respected and well-recognized?
If yes to any, consider step 2
- Define what you want to accomplish, when, how, to whom and for how much.
- Contact your local cable system operator. Find out what systems cover your geographic area by going to the directory: http://www.onetvworld.org/?module=displaystory&story_id=764&format=html
- Call the cable company and discuss your objectives. Be specific. Tell them what you want to accomplish, who is the decision maker in a specific purchase, or the influencer in the decision. Describe the detail of your business, your product and service efforts and your expected outcome from the advertising.
- Ask about the costs to produce the commercial from the cable company and get recommendations for production companies. Talk to your ad agency also.
- Be in close contact over the commercial content and how your company will be portrayed.
- Work with your cable company account executive on cooperative advertising available, select networks, programs and time slots that will reach a significant portion of your target audiences and within your budget.
Cable Facts
Cable dominated 2004 TV and 2005 thus far is going to Cable across the board; outperforming all other sources of TV in ratings, reach-ability, geographic targeting and content diversity
Ad-Supported Cable penetrates into the 84% of all US television homes that advertisers care the most about.
Cable is now well past the tipping point as Ad-Supported Cable is now over half of all television viewing
Cable created branded television. Viewers habitually tune to Cable "as much for the brands" as they do for the specific programs.
Cable-Speak Definitions
Cable System
The local operation that distributes cable TV channels such as MTV and CNN, usually over a combination of fiber optic and coaxial wires, to subscribing households.
DMA
Acronym for Designated Market Area. DMAs are a way of designating particular geographic markets, and are often ranked by size of population. New York City is the nation’s largest DMA so its DMA ranking is 1, San Francisco is 5.
Interconnect
A collection of two or more cable TV systems that work together to distribute commercials to a wider geographic area than either system, individually, would otherwise reach
Multiple System Operator (MSO)
A company that operates more than one cable TV system. Companies such as Comcast and Time Warner Cable are examples of MSOs.
Reach
The number of different people or households exposed to your television commercial. Often used in tandem with Frequency.
Zone
A geographic area, (an area adjacent to a location where most customers come from) or a "demographically concentrated area" that cable systems, such as a county or city. For example, San Francisco-Oakland-San Jose, CA, is the DMA, but Contra Costa County is one of the zones.
Source: 2005 Cable TV Facts, www.oneworld.org
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