In a move being watched by advertisers and networks alike, The Hallmark Channel is turning over larger chunks of its broadcast schedule to "sponsored programs" that recall the early days of television.
The Studio City-based cable channel, which reaches 78 million homes with original and classic movies and other programming, is having individual advertisers sponsor about 18 movies in the next year.
The company partly credits the strategy, which it may expand, with pushing advertising revenues to $150 million in 2004, up about 45 percent from a year earlier. In addition, Hallmark says that single-advertiser programs are attracting 30 percent more viewers than those with multiple advertisers.
"It really gives the advertiser value they wouldn't get in another venue," said Bill Abbott, the cable channel's executive vice president. "It cuts the clutter for viewers and allows for a more pleasant viewing experience."
The strategy is another tool companies are using to get noticed in an increasingly cluttered advertising environment, where viewers can zip through ads with TiVos and other kinds of digital recorders.
It follows moves by the broadcast networks to ramp up product placement in programs and to integrate brand names into storylines. For popular reality programs such as NBC's "The Apprentice," companies pay as much as $5 million to be featured in the plot.
Chris Moseley, the Hallmark Channel's executive vice president of marketing, even has a new word for it: "promotainment."
"Advertisers are really looking for a unique, differentiated way of connecting to that unique audience," she said. "I think everybody is starting to get into it."
The Hallmark Channel, owned and operated by Colorado-based Crown Media Holdings Inc., is signing over entire movies to single advertisers, which pay a premium for exclusive sponsorships and the opportunity to be mentioned in the same breath as the movie's name.
Advertisers pay three times as much for four minutes of ads per hour as they would in a more conventional format, plus a 10 percent to 20 percent premium for exclusivity. That means, Abbot said, that it costs more than $1 million to sponsor an original two-hour movie on the Hallmark Channel.
So far, Kraft Foods Inc. and Johnson & Johnson have sponsored movies. The companies declined to comment, saying they do not publicly discuss advertising strategies.
The sponsorships hearken back to the early years of television, when brands such as Geritol, Kent and Hallmark paid to attach their names to programs. That era began to tail off in the 1960s, in part because of the game show scandals in which sponsors were tarnished when programs were revealed to be rigged. Hallmark has continued to sponsor its own Hall of Fame series on network television.
But now advertisers are resuscitating exclusivity in order to get noticed in an age when viewers can easily block commercials. "Branded entertainment is on the rise, big time," said Bob Liodice, president of the Association of National Advertisers. "Some of it is pure sponsorship like what Hallmark is doing, but that's a small part of the equation."
Liodice noted that other techniques, such as Sears, Roebuck & Co.'s association with ABC's "Extreme Makeover" program and Coca-Cola Co.'s affiliation with Fox's "American Idol" broadcasts.
"We're definitely in a new time with technology and all the things you can do (as a viewer)," said Matt Brown, vice president of the Los Angeles-based media buyer Adlink, which connects specific cable audiences with advertisers. "How it all washes out I think everyone is still waiting for the best breakthrough model," he said.
While it's unclear to what extent these new strategies will replace traditional advertising, Hallmark executives credit the exclusive sponsorships with fueling ratings and revenue growth at the cable channel, which was launched in 2001.
They said that national advertisers use the exclusive arrangements to extend exposure for a family of products or a new rollout something they would not get with a series of shorter ads buried in a broadcast. In addition, more viewers are willing to watch four minutes of commercials per hour rather than the average of 12 during the non-branded segments.
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