SBJ/May 3 - 9, 2004/SBJ In Depth

Niche networks find favor as buyers aim for core markets

The same forces that are driving advertisers to demand greater value in their sports programming negotiations are giving the little guy a significant lift.

Niche services like the Outdoor Life Network, Speed Channel and the Golf Channel are gaining notice from advertisers who are either hesitant to pay the heftier prices of the large cable and broadcast networks or want to round out their schedule with more efficient buys that reach their core markets.

While the TNTs and ESPNs of the world garnered most of cable’s estimated $5.7 billion upfront market in 2003, smaller networks like Outdoor Life and Fox Sports had their hands out as well even though advertisers buy most of their ad spots for sporting events in either the seasonal marketplace for the specific sport or by the calendar year.

Why? It’s too much money to ignore.

Outdoor Life Network likes to tout the value of the audience it can deliver to advertisers with events such as the Tour de France.
“How we perform in the upfront is determined by how good a job we’d done in the past 11 months,” said John West, senior vice president of advertising sales at Outdoor Life. “I call upfront like getting our scorecard. We can always tell how well we’ve positioned our network during the year.”

The upfront also gives these networks access to companies that do not normally play in the sports marketplace or are unfamiliar with the smaller, niche services.

Outdoor Life tries to position itself as a recreation and lifestyle network. “We offer a large reach, but within a specific audience group. We have to talk about the value of the audience we bring,” West said.

Outdoor Life averaged 157,000 viewers during prime time in the first quarter, 49th overall among cable channels. But among men 18-49 it rated 41st, according to Nielsen Media Research.

It takes only a home run or two to lift a network out of obscurity. Outdoor Life scored its first blast in 2003 with the Tour de France, which drew huge figures for the network — an average 1.6 coverage rating, compared with the 1.1 rating it had promised advertisers, and about 1.2 million viewers during its three-week run. Outdoor Life typically draws ratings of 0.1 and 0.2 for regular programming. The network expects to be in 60 million homes by June, about 25 million less than fully distributed cable services.

Outdoor Life is ready to double its marketing budget for its Tour de France coverage and received heavy commitments from sponsors. Subaru hitched onto the event with its “Ride of the Day” program that will appear on billboards and Outdoor Life’s Web site.

But Outdoor Life can’t play in the upfront with the tour because it would be forced to sell ads more than one year in advance, longer out than most ad buyers are willing to commit. “We purposely held back the Tour de France out of the upfront. … We had no idea what the ratings would do,” West said.

“When we try to sell an event like the tour outside of the upfront, our ideal situation is selling it with a full sponsor package. That’s an awful lot of inventory,” he said.

Outdoor Life generally sells 30 percent to 40 percent of its inventory as part of a sponsorship, and it’s the only way the network can fill the nearly 350 hours of tour programming. This year Outdoor Life is adding the Gravity Games into its mix after NBC exited and is working with Octagon, the company that runs the event.

Other niche services are prospering, too, and attracting the attention of sponsors. Speed Channel has averaged a 1.11 Nielsen rating with its NASCAR Craftsman Trucks series, a 61 percent increase from 2003.

“Sports are now mainstream or niche and bought that way,” said David Schwab, Octagon’s director of marketing.

He said many advertisers now combine “a mainstream overlay and a primary target that can be a niche.” That means probably overpaying to capture a mass of eyeballs on a major network event like the NBA Finals, while zeroing in on the target audience with a sponsorship in a network like Outdoor Life, Golf Channel, Speed Channel or other fledgling services such as Fuel, College Sports Television or the Tennis Channel.

“It’s a challenge to find the right opportunity, and there are a lot of sponsorships out there for sale,” said Bob Basche, the CEO of Stamford, Conn.-based Millsport, which links companies with networks for sponsorships.

Andrew Grossman is a writer in New York.

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