Business Week’s Alex Sherman writes about CNN and its all news strategy…
Over the past 15 years, CNN’s average prime-time TV audience among 25- to 54-year-olds has slipped 6.2 percent, to 226,000, according to Horizon Media. Fox News is averaging 425,000 in the same demographic, 88 percent higher than CNN. Still, advertisers know there will be certain days when viewership on CNN will spike. On the day of the Japanese tsunami, for instance, ratings jumped 337 percent, according to Nielsen (NLSN). The problem for cable networks is that they can’t quickly monetize surprising news events that bring in huge audiences. Networks sell up to 70 percent of their total advertizing time nearly a year in advance, according to Brett Harriss, an analyst at Gabelli & Co. (GBL) The remaining ad inventory is held back and sold at more expensive rates, often up to 15 percent higher, to companies that want to take advantage of unexpected news.
Yet even these ads must be created and inserted into available slots before they can hit the airwaves, says Lyle Schwartz, a managing director at media-buying firm GroupM, a division of WPP, the largest U.S. advertising company. By the time they’re ready to go, the breaking news may already be over.
Another negative: Tragedy and advertising make for uncomfortable bedfellows. Airlines, for example, have provisions that prevent news programs from running their ads during coverage of plane crashes. Breaking news of hostage situations is also frequently uninterrupted, which means CNN’s highest ratings can occur at times when no ads are run at all, Schwartz says. “The consumer would not like being interrupted with advertising when there’s something important or urgent going on,” he says. “It’s sometimes inappropriate to have commercials.”