Abstract

http://ssrn.com/abstract=2032250
 


 



Basic Cable Network Segmentation Toward Minorities and Other Niche Audiences in a Digital World: An Empirical Study of Cable Advertising


Haizhen Lin


Indiana University - Kelley School of Business - Department of Business Economics & Public Policy

David Waterman


Indiana University - Department of Telecommunications

Sung Wook Ji


Michigan State University - Dept. of Telecommunication, Information Studies and Media

August 1, 2012

2012 TRPC

Abstract:     
Digitization of cable TV systems has permitted not only higher quality (HD) programming, but a proliferation of channel space, sparking a second wave of cable programming network entry since the late 1990s. Finer and finer segmentation of cable networks toward niche audiences, including racial and ethnic minorities, has thus been permitted. Yet, descriptive data indicate that average cost per thousand CPM advertising rates of basic cable networks remain far below those of the “broad appeal” programming on the major broadcast networks and the supply of programming orient toward racial and ethnic audiences (eg, BET), appears to be low.

In this paper, we attempt to understand the limitations of cable television networks in more finely segmenting toward niche audiences, especially toward racial and ethnic audience groups. Our primary approach is by means of an empirical study of the determinants of cable TV network advertising rates, the source of about 2/3 of total revenues of basic cable networks on average.

Using a database of 78 basic cable TV networks operating in 2010, primarily supplied by A C. Nielsen, preliminary results indicate that cost per thousand (CPM) advertising rates increase, at a decreasing rate, as the network’s household reach increases, but that the size of network ratings have no significant effect. The cable “reach handicap” is thus a significant damper on advertising revenues of basic cable networks, but there is no evidence that the small size of audiences, per se, reduces CPM rates. Viewer age has a significant effect in most models, but other demographic factors, including % black and % Hispanic, and audience homogeneity, have no measurable effect on ad rates (contrary to previous research in radio and TV which find lower ad rates for blacks and Hispanics).

Finally, we investigate determinants of the distribution of blacks and Hispanics among 84 basic cable networks, and find that while content elements are an important factor, much of the variation can be explained by production values, as indicated by network production costs, a factor that attracts audiences without any regard to racial or ethnic origin.

Number of Pages in PDF File: 38

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Date posted: April 1, 2012 ; Last revised: May 13, 2014

Suggested Citation

Lin, Haizhen and Waterman, David and Ji, Sung Wook, Basic Cable Network Segmentation Toward Minorities and Other Niche Audiences in a Digital World: An Empirical Study of Cable Advertising (August 1, 2012). 2012 TRPC. Available at SSRN: http://ssrn.com/abstract=2032250 or http://dx.doi.org/10.2139/ssrn.2032250

Contact Information

Haizhen Lin (Contact Author)
Indiana University - Kelley School of Business - Department of Business Economics & Public Policy ( email )
Bloomington, IN 47405
United States

David Waterman
Indiana University - Department of Telecommunications ( email )
1229 East 7th Street
Bloomington, IN 47405
United States
812-855-6170 (Phone)
Sung Wook Ji
Michigan State University - Dept. of Telecommunication, Information Studies and Media ( email )
442 Communication Arts & Sciences Building
East Lansing, MI 48824-1212
United States
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