Years ago, Spanish-language stations started dominating the Los Angeles radio market and it's just a matter of time before the same thing happens in television.
Only this time the stakes are considerably higher, because there's a lot more money in TV advertising than there is in radio.
Univision Communications Inc.'s KMEX-TV Channel 34 sets a new ratings record seemingly with every Nielsen sweeps period. In February, its average prime-time rating jumped 8.1 percent from the like period a year earlier, making KMEX the No. 3 station in the market in prime time. It was No. 5 a year ago.
Driving the station's success at prime time are three telenovelas that are the most successful KMEX has ever aired. Telenovelas have been likened to English-language soap operas, but they really have more in common with extra-long miniseries because they have a beginning and end, usually after about six months.
Given the track record of mainstream network TV, in which hits are few and far between, you would think a network or station would be in a tough spot if every "Seinfeld"-type hit ended after only six months. But KMEX and its network parent Univision have a built-in advantage that English-language networks don't have: mass-market testing.
"From what I understand, (Univision) will replace these three novelas with something just as strong," said Leon Potasinski, senior vice president and media director with Spanish-language ad agency La Agencia de Orci & Asociados.
How do media buyers like Potasinski know this in advance? Because the telenovelas aired by Univision are produced in Mexico, and they're aired south of the border before coming to the United States. If a show is highly successful there, most likely it will be just as successful here.
As KMEX's ratings have increased over the past three or four years, so have its ad rates. Potasinski says the station's advertising cost per thousand viewers is beginning to reach parity with English-language stations, though he says it's still a more "efficient" buy than they are, at least at prime time.
The telenovelas aren't the only success stories at KMEX. Its daily newscasts are coming on strong, and while it still can't match stations like KNBC-TV Channel 4 in household ratings, its ratings for certain desirable age demographics are already better than any other L.A. station.
Latino households tend to be larger than other households. According to figures from KMEX, Latino households in L.A. contain an average of 4.2 persons with a median age of 24 years; for non-Latinos, it's 2.5 persons averaged 36 years. That means for every household reached by KMEX, there are more people watching and they tend to be younger.
KMEX officials wouldn't comment on the record Univision is notoriously press-shy, and executives are directed not to talk to the media without clearing multiple channels.
Potasinski estimates that KMEX will be the No. 1 station in L.A., even in household ratings, within a year and a half. "Their programming is getting better and better, and you can see it in the audience numbers," he said.
Launching an IPO
A while back, people were saying you couldn't make money on the Internet by trying to imitate television offering free content to users and getting your revenues from advertisers so many started turning to e-commerce. Now the pendulum might be swinging back to the advertising model.
At least that's the premise being pushed by Santa Monica-based Launch Media Inc., which filed papers for a public offering last month. Launch, which is seeking to be something like the online version of MTV, gets most of its revenues from advertising.
Launch's filings offer an interesting glimpse into the workings of a soon-to-be-public Internet company. It's bleeding money, of course, though that matters little to Wall Street investors, who are pouring cash into Internet ventures in the hope that someday they'll realize an enormous potential.
Launch was one of the pioneers of interactive advertising. Since 1995 it's been publishing a music-oriented CD-ROM magazine sold through subscription and at record stores that offers interviews with artists, videos, music and other content and supported by animated ads that users could interact with to get further information.
The CD-ROM is being gradually phased out in favor of the company's Web site, which offers much the same content with less animation because of speed problems on the Internet. The site is free, but to access it you have to give demographic information about yourself age, sex, musical preferences, etc.
Advertisers are charged two separate rates depending on how targeted they want their messages to be. If you only want to reach males between 13 and 18 who listen to Marilyn Manson, you'd pay a far higher rate per thousand people reached than you would for a banner ad on the entire site.
When everybody's got a cable modem, the theory goes, Launch and sites like it will be able to offer full-motion, TV-style commercials that are interactive and can hit much more narrow targets than television ever could.
Launch offers e-commerce as well, but more than 60 percent of its revenues come from advertising and that percentage has been rising over the years, not falling.
"I'd much rather be a media site than a retailer," said Launch CEO David Goldberg. That's because fierce competition on the Internet is forcing retailers to keep slashing their prices it's much easier to comparison-shop on the Web than to drive around to separate stores, so online retailers have extremely low margins. Online advertising, Goldberg believes, is the wave of the future.
"For years and years, people said cable networks would never work, they'd never make any money," Goldberg said. "Now ESPN is the most profitable network in the history of man."
News Editor Dan Turner writes a weekly column on marketing for the Los Angeles Business Journal.
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