With satellite companies stealing cable’s video customers and telcos laying fiber to grab even more of the pie, MSO marketing gurus must execute their strategies flawlessly. We were able to convince nine of them to put down their BlackBerrys and talk about those strategies before the CTAM Summit. Despite the competitive challenges, they projected confidence and remain convinced that smart marketing will keep the satellite and telco bogeymen at bay. While each MSO has its own strategy to gain and retain customers (and sell new services to existing subscribers), the marketers we spoke with agree on some basic tenets. For one thing, they respect the telco threat, with some expressing admiration for the phone companies’ ability to impress consumers and policy makers with their hype. They wonder how long Verizon can continue pouring huge sums into marketing FiOS. Cable’s marketing pros also expressed optimism about the potential for targeted marketing and the personalized on-demand experience. Addressable boxes and dynamic ad-insertion technology have helped create an environment in which marketers can surgically target elements of the bundle at specific customers. That technology is improving daily. The cable marketers also agreed that the industry must spend marketing dollars effectively and precisely (rather than simply more voraciously) to beat deep-pocketed competitors. At the root of all their efforts is the successful marketing of the cable “experience”—otherwise known as the bundle. As Cox’s Joe Rooney says, “Bundling is not discounting. Bundling is giving customers great value and giving them great integration.” VARN CHAVEZ
CABLE ONE
Cable marketers can get so caught up in customer acquisition strategies that they sometimes forget the importance of keeping their current customers coming back for more. Customer retention just happens to be Varn Chavez’s specialty at Cable One, where he serves as marketing director, Central division. Chavez says fulfilling promises is what it’s all about. CableWorld: How can marketers keep customers from defecting to a competitor? Varn Chavez: We need to be sure that we are providing the customer service and services the customers are expecting from the cable industry. In turn, we need to market and let them know that we are providing these services and fulfill our promises to deliver said service/services. And finally, in a positive way, we need to position ourselves against the competition (no Pig/Walrus/etc. ads) and inform our customers about the potential pitfalls DBS service and the lack of two-way services. CW: Do you face Verizon FiOS in any markets and, if so, how are you fighting them to retain customers? VC: We do not face Verizon FiOS in any markets, but do face a fiber overbuilder in one of our markets, but they haven’t launched yet. We believe our $29.95 packaging options, and great customer service will keep most customers on our side. We’ve proven ourselves as a solid and trusted provider in our markets. In most markets, we offer same-day installation and service calls, and that means a lot to our customers. CW: What are the key principles behind effective retention marketing? VC: Keeping it simple, yet personal in nature and trying to understand what is important to each individual customer. I don’t believe a complex marketing campaign with many elements is necessary. Proper communication that is relevant to the customer is the most important aspect that a customer is looking for in order to be satisfied. Our research indicates that the attribute that is most important to them is “being heard.” They want services from a company that listens to their concerns and responds, and we’ve developed several image spots that speak to this concern specifically. Any marketing message that is provided, however, is irrelevant if we can’t deliver operationally. CW: What’s the biggest challenge in retaining customers? VC: Finding retention programs that work and providing an ROI to the company that is measurable. For example, it’s difficult to prove loyalty/miles programs are effective, and they are expensive to maintain. All of us have multiple frequent flyer, frequent hotel, and grocery store cards. Does that make us any more loyal? Most likely not…but they do help keep the brands [in mind] against competitors that don’t offer such programs. CW: What role will retention marketing play in the overall marketing scheme over the next 3-5 years? VC: Retention marketing will play a greater role, but not a huge role in the overall marketing scheme. The churn reduction that we’ve seen by providing advanced services to our customers, such as Internet and DVR, is much more dramatic than any marketing campaign can provide. Customers want services that fill their needs and a good value. If we can provide this and not give them a reason to leave, why would they? MARVIN DAVIS
COMCAST Since defecting from Verizon Wireless last year to join Comcast as chief marketing officer, Marvin Davis has been on a nonstop mission to tout the superiority of cable’s products. If Comcast’s stellar results for the first quarter are any indication, he’s finding success. CableWorld: What’s the biggest marketing challenge out there? Marvin Davis: We have so much opportunity, so the biggest challenge is really to stay focused and prioritized on what we’re going to do next. When you have a lot of opportunity, there’s a danger that you’ll try to do too many things at once and not execute well. So our challenge is to keep a focused and prioritized list of the things that are going to have the biggest impact on our business and not get too distracted trying to do too many things at once. CW: Comcast has been a leader in video on demand. But how does this change the marketing landscape? MD: From the standpoint of us as a cable operator trying to get customers to come to Comcast, we think it will continue to be more customer friendly as far as how they navigate various types of content—and all of that will be better than the various experiences you can get from satellite. From a strategy standpoint, we’re just going to continue to expand on the path we’re already on. That’s making more robust content there, having more of the things that people want to watch. That piece will just continue to get better, and we think that if we stay on the path we’re on, we’ll just separate even further from the other video options. CW: What about DVR’s/on-demand’s enabling of ad-skipping? Is it the death of the 30-second spot? MD: The death of the 30-second commercial has been reported everywhere, and I don’t think it’s going anywhere soon. There are still a large number of passive viewers who will still live within the traditional viewing model. But it may be the death of lazy marketers. You have to be more innovative and more targeted in understanding what messages are going to break through. If you have a really good message and a really good product, customers will watch it. There are people who actually go to websites to look at ads that are of interest to them or that are entertaining. People pass them around. So I think it has put more of a burden—and rightly so—on marketers to not just throw together a bland 30-second spot that basically reads to the customers. They have got to be stronger on their insight and put more of an emphasis on customer understanding than has maybe been there before. And from the creative standpoint, it’s going to raise the level of what’s considered great advertising. And if it is, not only will people not skip through it—but if you really get, people will go look for it. CW: With broadband competition heating up, what do marketers need to know? Is it all about speed or will it become more about content and the experience? MD: I think it’s all of that. What changes is the sequence. Right now we’re in a place where our message is that speed is always important. And our message is that Comcast’s high-speed Internet is faster than the DSL offerings. The first thing to understand is that not all speed is created equal. As customers get more understanding of the differences of speed and are able to cut through the muck, then it’s, “Well, why do I need the speed?” Then it’s all about what can you do with it, and that does get to the experience. And if you look at more the things that a lot of people are doing online, it’s a lot of downloading of video and music—it’s a better experience with speed. So we have to make more folks understand that. And with gaming and other applications that require a fatter pipe, we’re starting to see that. We talk to our customers—especially our gamers and people who do a lot of downloads—when they’ve gone from a DSL speed to a cable experience, they won’t go back. We have to continue to drive that. Then there’s all the other content that’s out there: Photo shows, video mail…all of that continues to expand the things that people need speed for. CW: What about exclusive broadband content deals? Is that the way to get the marketing edge? MD: Having fast, reliable speed is just the table stakes. If you’re not able to deliver that piece, being able to layer on the content is going to fall flat. So assuming that we continue to maintain that superiority, where it makes sense to enhance the content—whether that be expanding on the digital services or looking at exclusive opportunities—we’ll look at all of those and make decisions. But I can’t come out and say we definitely have a plan for this time frame. It’s not that rigid. CW: Cable has been successful marketing high-speed data and voice. Will the quadruple-play mobile component be any different? MD: The good thing for us is that with the concept of mobility, that ground has already been plowed by other industries. So when you distill it down, customers are saying, “Why does my experience have to change…or not be available just because I’m not home?” So this idea of taking this Comcast experience and extending it when you’re outside of your living quarters—people get that. It’s being able to deliver a video experience that you can enjoy when you’re not at home. Being able to communicate that to customers is not that hard. But getting there is really finding how many people are really looking for that, and then where do you find the business model because there are really some costs inherent in doing that. CW: But do you try to market that “cable experience outside the home” right away or maybe start with something like setting the DVR remotely? MD: First and foremost, we emphasize the superiority of the experience regardless of where you have it. Once people recognize that the Comcast experience is better than what they had with someone else, the mobility piece becomes one feature or factor showing how that experience can be extended. Being able to mobilize a bad experience is not something that customers want. So you first have to show them that it’s a great experience, and then focus on extending that beyond the screen and the living room. CW: Do you try to market all of these products as a bundle or keep them in separate marketing baskets? MD: The first goal is to market the quality and superiority of the individual products. The value of the quality of the bundle is based on the ingredients in the bundle. People need to understand what’s in it. When you tell them that they get video and broadband, you want them to say, “Well, it’s not just broadband. It’s Comcast High-Speed Internet. And I know that’s better because it’s three to five times faster than DSL and has reliable speeds.” Then within the bundle, the value proposition is convenience and a value element from a savings standpoint. You have to do both. You have to continue to tell them why not all bundles are created the same. The last piece is that a really good marketer wants to make sure that they have something for all the customer groups. And there are still going to be a lot of customers who really just want to buy an individual product. So you have to make them understand that if they don’t want the bundle, you still have something for them. You want to be clear that you can buy them together or you can buy them individually. But either way, the products you buy from Comcast are going to deliver a superior experience. CW: Sounds like this all requires marketing resources. How can cable marketers make that case to their higher-ups? MD: Fortunately, that’s not an issue here at Comcast. But the first recognition here is that the higher-ups are very good business people. If they’re presented with an opportunity to drive more business, they’re going to listen. What marketers need to do is be a little bit more precise and a little more data-based in their recommendations as to why this marketing investment is going to lead to things I can look at from a business-results standpoint. While there’s clearly a judgment piece of a good marketing plan, there’s a lot of science to it as well. So the more that people can apply that science and put financial analysis to it…that is the way that your audience is thinking about it…the return they’re going to get on the dollar. You’re going to have a much better chance succeeding in getting someone to make that investment. CW: Your old employer Verizon is making a big push into cable markets these days. MD: Just to clarify, I came from Verizon Wireless. CW: Duly noted. But what’s your impression of Verizon’s quadruple-play marketing tactics so far? MD: It’s difficult because when you look at their efforts to date and the market, it’s hard to really project and scale that on a broader basis. I understand their strategy, which they have stated many times. But we’re still trying to see how exactly that’s going to scale to a large degree. But on the short term and from a video standpoint, our competition is the satellite provider. From a broadband standpoint, we think [we’re already] in a really good place to compete. Like any competitor, we look at their tactics and try to assess how effective that is, but we’re not looking at it any differently than when we go to market every day. We know we’re competing for customers. We know we have to emphasize the value and superiority of our products. And if we do a good job of that on our own, we should be successful. CW: So far, the telcos don’t seem to be interested in a price war. Do you worry about that developing and upping the marketing ante? MD: We believe that if you’ve got a good product that’s reliable and that people want, you don’t have to rely on deep discounting to get them to take it. Despite the continuous discounting of DSL, our results on the high-speed Internet side is that we continue to grow subs at a good rate. We don’t have any reason to believe that’s going to change as these initiatives get into market. Our focus is developing superior products, communicating about them very well and providing them at a good price. It doesn’t have to be the cheaper price. We believe that there’s a large segment of customers out there that will recognize that and pay for it. PATRICIA GOTTESMAN
CABLEVISION SYSTEMS
As co-chair of the 2006 CTAM Summit, Patricia Gottesman couldn’t be more immersed in the cable marketing game. The EVP, product management and marketing, at Cablevision Systems says she’s excited about cable’s advantages as it takes on new competition. CableWorld: What’s the biggest marketing challenge you’re facing? Patricia Gottesman: Maintaining market share leadership by profitably marketing and selling more products into more homes. And, extending the Optimum brand across a broader and deeper range of television, broadband and voice products. CW: How does the on-demand world change the game? PG: The benefit of on demand for the cable industry is that we can execute well, given the long experience we’ve had with on demand and transactional distribution. No other industry—including the phone company—has this type of experience. The satellite companies still can’t offer true on-demand programming and their attempts at simulating on demand will continue to pale in comparison to what we can do. CW: Is more targeting and personalization having an effect on your marketing activities? PG: On demand opens up more advertising inventory amongst the highest value customer segments, making cable the best place for selling products and getting your marketing messages across. On demand by itself is valuable. The fact that cable continues to increase its attractiveness as an advertising destination by adding differentiated inventory that will reach targeted customers in meaningful ways defines the larger opportunity. Our ability to leverage superior fiber networks and superior customer relationships across a variety of television, online and mobile media will make us the advertising medium of choice. It also doesn’t hurt that we’ve got a great deal of experience in marketing and selling interactively through our television and online products, making us the most experienced and accountable medium for direct commerce. Cable offers advertising partners and clients the best value by offering our customers rich buying opportunities in addition to rich shopping opportunities. CW: But isn’t ad-skipping the big X factor? PG: Looking at this question as an advertising buyer as well as a seller, we’d recommend increased bundling, personalization and relevance in advertising plans. If we advertise across a range of cable products, with each ad reinforcing the last according to the best capabilities of each medium, we’re more likely to get our messages across. Somehow, the economics of television, online and mobile media have to complement one another and be served up in such a way as to maximize value for the buyer. CW: How big a part will personalization play? PG: Our personalization capabilities will make advertising more relevant to our clients and customers and our ability to translate advertising into buying from home and business will increase both relevance and customer value significantly. Also, because we’re focusing heavily on building customer relationships in the business market, we’ll be able to bundle advertising with business products in such a way as to maximize value for our advertising clients. This is a winning combination—cross-media inventory, a network infrastructure that enables personalization, direct commerce experience and a competence for bundling business products with targeted advertising. We’ve got more to offer advertisers than ever before, not less. CW: What should marketers be emphasizing as they promote broadband service and broadband content: speed? experience? breadth of content? PG: Speed is key. We recently completed a significant speed increase for all of our Optimum Online customers providing the fastest broadly deployed high-speed broadband service in the nation. Optimum Online new delivers average speeds of up to 15 Mbps downstream, 2 Mbps up. We’ve also introduced a premium-tiered service, Optimum Online Boost, offering maximum downstream speeds of 30 Mbps, 2 Mpbs up, as well as a comprehensive suite of advanced online applications. Our customer experience—in terms of speed, ease of installation, availability of top quality customer service—is unparalleled. And, new services that build on cable’s broadband success will be natural additions, whether they focus on better content solutions, personalized applications or the ultimate fusion of online and voice. CW: How about mobility? PG: Mobility is a natural extension of cable products. Our customers want to take the products they value at home and at work with them wherever they go. We can help make that happen by pursuing virtuous relationships with mobile partners and by building our own mobile brand extensions. Mobile advertising is similarly part of a complete advertising approach to the market that includes many other media to be effective. CW: Any marketing challenges there? PG: We probably don’t need to convince customers of the importance of mobility; they’re the ones leading us on how to develop mobility because it starts with a single customer relationship and a singular customer experience that customers want to take on the road. And, at home, at work or on the road, our customers are susceptible to relevant marketing and messaging reinforced across a broad range of media. They’re not turning off their televisions or Internet connections in order to take a cell phone call. And, we’re betting that they’ll be even more susceptible to personalized buying opportunities that can grow out of traditional ads in both the television and online worlds. CW: With bundling now the norm, what are the challenges in integrating marketing messages across different products? How will marketers beat competitors in marketing the bundle? PG: Once again, cable’s got the competition beat on the bundle. We’re the only industry that offers all of our products through a single network and a single service experience. The telephone companies are running to catch up with this model, but their ability to make it happen in a cost efficient and timely way is seriously questionable. Given that our products are naturally integrated, we have the best economic flexibility for bundled offers and bundled product development. Marketing messages built on all of these natural advantages have a great launch point. CW: How can marketing departments do a better job convincing CEOs to spend more time, effort and money on marketing activities? PG: If anything, our CEOs and COOs are asking us for more these days. There’s never been a better time to be in cable marketing. CW: What have you learned so far from Verizon’s marketing tactics in markets where the telco has launched FiOS? How have you responded to those tactics? PG: They seem to be focusing on some fairly expensive tactics because they don’t have a lot of customers and they haven’t built out FiOS very extensively. They have to be struggling with marketing efficiency as a result. So, we’re not responding to them in approach; we’re just doing more of what we’ve done all along—combining branding, advertising, direct marketing, sales, service and overall product performance into an integrated marketing approach. CW: You are the co-chair of the CTAM Summit this year. What do you hope the event will accomplish? PG: Given today’s dynamically changing and competitive marketplace, our goal for Summit is to bring together the brightest minds in the industry to collaborate on innovative new approaches to growing our businesses. PAMELA EULER HALLING
INSIGHT COMMUNICATIONS
Marketing cable’s products to young consumers is a top priority for Pamela Euler Halling, SVP, marketing and programming, Insight Communications. They’re not interested in a brand that fits like a pair of comfy old slippers. All they want is a good value and “something that works.” CableWorld: What’s your biggest marketing challenge these days? Pam Euler Halling: Staying relevant to the younger generation. We do a good job in serving Baby Boomers, but it’s the children of Baby Boomers that really present the challenge. What products do they use? How do they use them? Who do they want to do business with? Will our values connect with their values? That’s really the challenge for the future. CW: That youth market seems to want everything on demand. PEH: We have to find ways to connect with people and lead them to our product. The days of customers leading us are probably not as productive as us leading them to our products. People relate to real experiences. If we can use those real experiences to get the power of word-of-mouth working in our favor, then I think we can stay connected. CW: But don’t you need to make them feel they’re in control? PEH: Right. But you do that by being very straightforward and clear in your messages. It’s being honest and trustworthy. Those are all key values that people can obviously relate to. There’s a lot of hype out there. There are a lot of companies vying for their attention and a lot of products. It’s difficult to sort through all of that and understand what’s right for you. Who’s telling you the truth and who isn’t? What’s the best value? CW: How far can personalized marketing go? PEH: We’re still in the mode of general messages about our products. From an advertising point of view, we need to start thinking very seriously about how to be more personal and be more relevant. We’re going to have to provide more information and be more helpful in this time-constrained world. You need to find the sales channels that will work for your products. CW: But with consumers so in control, they can skip ads and tune out messages, no? PEH: People are still looking for information. That’s how the Internet got started. TV can do the same thing. But the nature of the advertising is going to have to change. You still want to entertain…but on the other hand, you want the ad to provide information. Make it useful. Make it helpful. CW: How is the marketing of broadband evolving for you? PEH: Broadband is very interesting. Our broadband service is still about speed. But it’s also connecting with our brand. Broadband service needs to be usable but any customers using our portal have to find content and functions that reflect our brand. CW: Is that about the content or the marketing message? PEH: It’s both. Everything that you say and do—whether it’s the broadband portal or your company website—has to be reflective of your brand. It goes to the value. That’s truly important these days. The younger generation doesn’t trust as much as perhaps we would like them to. We need to be absolutely real and straightforward. They’re really not brand loyal. They’re looking for the best value and for something that works and does what it says it’s going to do. One of the big challenges is following through on what we say we’re going to do and meeting their expectations. CW: How do you market the bundle? PEH: The bundle has a simple positioning that makes the message an easy one: It’s a great value. Once you get the point of more than one product, you’ll find more compelling reasons to buy more. It’s one company. One bill. All of that starts to build, and ultimately be a great value. CW: Any trick to doing it better than your competitors? PEH: For us, it’s really about great service. We know that for the most part we can pretty much provide the same products. But it’s the great service that goes along with those products. CW: And you don’t face Verizon FiOS anywhere yet. PEH: Not yet, but we’ve looked at what they’ve done. They didn’t have to start with an incumbent service. They were able to just create a new video product. What I love about what they’ve done is that they’re doing what we’re going to be doing, and that is making the lineup much simpler and more relevant by creating genres of content. All the sports content is together. All the news is together. I like that. That’s something we’re planning on doing as well. CW: So you admire some of what they’re doing? PEH: Yes. CW: Beyond all the new competition, any advice on how to get more marketing support from the CEO? PEH: This is going to sound obvious, but all marketing execs really have to do is show the CEOs the numbers. More connects. Few disconnects. A reasonable cost per subs achieved. You just have a relentless focus on producing a desired result. That means setting goals for productivity and continuing to raise the bar for those goals. SAM HOWE
TIME WARNER CABLE
As SVP in Time Warner Cable’s voice services division, Sam Howe’s world revolved around telephony. But since taking over as the MSO’s chief marketing officer last year, he has assumed the more complex role of overseeing the entire bundle. Like other top marketers, he’s focused on selling experiences, not commodities. CableWorld: What’s the biggest marketing challenge you face right now? Sam Howe: Anticipating the competition. If we’re good as marketers, we’ll move from selling more bundles and specific packages to really anticipating what the competition might do next. That’s the hardest thing for organizations to learn. That’s the thing that will keep me up. Not so much will the competition make the move, but are we prepared for it? CW: What’s the best strategy to achieve that? SH: It’s really to drive competitive intelligence deeper into the organization—not only from corporate to field but laterally. It’s getting almost everyone expressing what they plan on doing in terms of competition. Instead of saying, “Hey, I’ve got a multicultural program I want to do, and here’s why it’s good and right,” the starting point should be what the competition’s doing or what they might do and expressing it in terms of competitive opportunity or efficiency. CW: What about the on-demand world and its affect, if any, on your marketing activities? SH: We’ve all pioneered on-demand at various levels, but most of it has been around as video on demand, movies on demand and free on demand. I think the real notion about demand is going to change again. It’s not all going to be about the entertainment, per se. It’s about customers wanting to control their entertainment. It’s less about content and more about functionality that helps people interact better with the thing that’s in the living room. And a lot of those aspects have an on-demand motion. CW: Time Warner’s Start Over service, which enables viewers to restart a program, seems to be getting buzz. SH: It’s [our] No. 1 video feature. The reason is that people quickly understand that it allows them to control their video experience in an on-demand kind of way. That’s why Time Warner is going to spend more time on functionality that allows someone to control that thing in the living room as opposed to obsessing about content. CW: How do market something like Start Over—as an “on-demand” feature or simply a nice convenience? SH: It’s interesting. We think about Start Over and promotion. But what’s quite interesting is that when you put Start Over functionality presented as an option on the TV set when somebody first turns on the set or watches a show, and it says, “This show is Start Over enabled,” that’s 90% of the marketing. We’ve found that in a couple markets where we didn’t even promote it broad scale, people got it without even being told what it is. CW: But on-demand functionality makes it easier to skip ads. That’s got to concern any marketer. SH: You bet. Ad-skipping is the bane of a marketers existence today. For the traditional things that we are doing like the TV spots that can be skipped, we are looking to more intrusive advertising. When I say “intrusive advertising,” I mean with images and activities that are arresting. With our partner Ogilvy & Mather, we’re looking to advertising that isn’t what you’d expect. We’re trying to avoid the literalism of our past advertising in which someone needed to understand it in one shot. In fact, we’re counting on somebody almost to solve the riddle of what we’re presenting and wanting to see it more than once. It’s a gamble, but that’s the kind of thing that I think you’ll see more and more people do with traditional promotions going forward. We’re also thinking more and more about online extensions. I think we’re seeing nothing short of a sea change in how people not just buy products, but in how we engage with them. So we know that we’re almost playing catch-up with how we have to engage with them on the Web. We have some things going on, but nothing yet that we feel is a winner. So we’re playing catch-up. CW: What about broadband? How do you market it with the increased competition? SH: We’ve learned that speed and e-mail functionality remain the kingpins of an Internet experience. All of our research indicates that. Does that mean that we should ever increase speed? Not necessarily. Our brand and our marketing have to give the assurance that our customers are buying the best experience, which to them means speed and e-mail functionality. We’re glad that we have a name and not a descriptor for our product, and that’s Road Runner. The research and the share data bear this out. Compared to the rest of the industry, we have a much higher proportion of share compared to other cable companies for high-speed data and versus DSL. A lot of comes down to our brand that seems to symbolize the things that people want or are willing to pay more to get. We can’t just increase speed and lower price. That’s a zero-sum game. We’ll continue to refresh the Road Runner brand, continue to be competitive on speed and create good value for people in an e-mail product that they expect. CW: Time Warner Cable is among the MSOs partnering with Sprint on mobility. What marketing challenges do you face on the mobility front? SH: Mobility is an interesting thing. It’s not about selling cell-phone service first. It’s about creating a mobile experience for cable users and how we can help them extend their use of that. That’s the area that we find most intriguing. Therefore, what do we need to do to capture that opportunity? The first thing is to trial and learn. The Sprint opportunity is going to allow us to do that. CW: OK, but what specifically will you be doing with Sprint? SH: We don’t know how it’s going to shake out yet. And the secret is that no one does, not even those who have cellular assets. But we know that we have inherent strength in bundling that puts us ahead of our competitors. We’re an organic bundler. Our wireless experience has to be organic. Some people might be dismissive and say, “Well, cable doesn’t own cellular properties,” but we don’t have any turf to defend in cellular, and we can experiment in a way that others can’t. CW: Are you saying that the wireless component has to be “cable-like” in the way it’s presented to consumers? SH: Absolutely. Whatever cable sells has to be a meaningful extension of the cable experience. Otherwise, we’re just entering a commodity market and really adding no value to the customer experience. CW: Does marketing the bundle create new hurdles for you as a marketer? SH: Well, bundling’s first translation for consumers is value. The other is simplicity as best expressed by a better product and one bill. We have to make sure that we reinforce that all the time. We also have to make sure that we refresh the bundle with added-value like Start Over, for instance, or caller ID on TV, which in it’s simplest form is a converged product. We have to keep mindful that some of the best convergence is the simplest and that it reinvigorate the bundle. Otherwise, convergence doesn’t matter. CW: What about getting more marketing money and support from the CEO? Any advice? SH: First of all, don’t complain to your CEO that you’re being outspent. Try to [show] where you have advantages and how you’re maximizing them and how you could push them higher with more resources. That’s the surefire win to gain more resources, whether it be money or organizational support. CW: And show some evidence? SH: Evidence is really important. But you can’t say, “Hey, our competitor is about to bundle. Give me lots more money.” You have to describe why bundling is working for us and how we can strengthen. Cable is about bundling, part 2. The telephone companies are just getting started with bundling. Cable is already through stage one. Our goal is to figure out how we get to the next incarnation. CW: What do you think of Verizon’s marketing tactics? SH: Verizon’s marketing tactics have actually been pretty good. They’re making some interesting pitches to customers. The most effective defense is to make sure that the basics are in line before they get into a market in terms of service. MARY MEIER
SUDDENLINK COMMUNICATIONS
When Cebridge Connections changed its name to Suddenlink following several acquisitions, SVP of marketing Mary Meier knew she had her work cut out for her. As long as Suddenlink remains focused on targeting the right messages at the right people, she says she’ll be able to win over customers. CableWorld: How tough has it been to meet the branding challenge created by the corporate name change and the Cox and Charter acquisitions? Mary Meier: That’s probably the one that keeping me awake right now. We’ve got the Cox acquisition, which is a great overlay. We’ve got the Cebridge acquisition. And then we’ve got the Charter acquisition coming on. Keeping those properties and all those different [marketing] offers [aligned]—that’s going to be a challenge. But the team is up for it. CW: Will the transition be gradual or—pardon the pun—”sudden.” MM: It’s going to be gradual. We’ve only had a very short period of time to be able to develop our creative and materials for Suddenlink, and so we’re doing it very softly. But we’re hoping that by Aug. 1 to have all the trucks changed out and able to be fully marketing under the Suddenlink name. CW: Does bundling complicate marketing? A few years ago, you just had a video product to sell. MM: You can’t go forward and throw your marketing against the wall like we’ve traditionally done in the past. I think you have really got to get your segmenting tools and your propensity modeling, and use those to make sure you’re targeting the right customers. Otherwise, you’ve got a lot of waste. CW: The on-demand world is here. How does that change the marketing equation? MM: I don’t think that any of us have really figured out how the on-demand world is going to affect what we do. But certainly it’s something we’re paying attention to. In the meantime, mass-market advertising isn’t really cost-effective for us. The overwhelming majority of our marketing focus is on very targeted, direct-to-consumer tactics—the telemarketing, direct mail. We’ve also experimented with targeted voice messages. We expect to do more on the Web in the near future. I personally think there are no limits to what technology will enable us to do when it comes to targeted, personalized advertising. And in the end, the niche marketing is the future. It’s all about catching the right consumer at the right moment and in the right venue and with the right message. CW: When will we see more of the personalized ads? MM: It’s going to depend on the market. If you’re in the New York, it’s going to hit you in the face really fast. CW: Is personalized marketing more effective or simply an unavoidable reality? MM: I think it’s a reality of the marketplace and the consumer. If you can get the right message or the right offer via the technology, you’re going to hit a home run. It varies the way you’re going to hit customers. It may be the phone. It may be the website. It’s all over the board. CW: What about targeted marketing through the set-top? MM: I think it’s still very experimental and people are just feeling their way. But you have to believe that when you direct your messages, your results are going to be better. CW: What about broadband? Do you market raw speed or more the experience, which could include content? MM: This is going to sound like a clich�, but it’s all of the above. Speed, content, experience—they’re all very important to the consumer. I also believe that we also have to do a better job marketing broadband as we already market our other services—mainly through an emotional connection with our customers. One thing I constantly harp on with our team is that we have to market more like consumer packaged-goods companies through emotional connections. How we do that has less to do with product attributes and more to do with the message and the creative. Once you get past these tech-savvy, early adopters, the overwhelming majority of the remaining customers don’t buy attributes. They buy an emotional connection to the brand based on how that brand can enrich their lives. The devil is really in the details. It’s about how you can improve their lives and what kind of connection you can make with the brand. CW: Are you looking to broadband content partnerships to give you something to market? MM: I think it’s extremely important, especially for an MSO of our size. There’s only a certain amount that we’re able to do financially, and if we can build strong partnerships with Google…it’s really important. CW: How does bundling change the marketing game for you? MM: I think the bundle is a win. It’s targeted messaging. With certain customers, you have to emphasize one element of the bundle. With other customers, you have to emphasize another element. We’re going to beat the competition based on our ability to target our messages to those customers. Our ability to use individual elements of the bundle to draw consumers into the entire bundle—that’s really key. It’s not real sexy. It’s really basic blocking and tackling. Our experience with the bundle as we’ve launched telephony in some of our markets is that it definitely has a halo effect. We’re seeing markets that traditionally have had net losses in video and minimal gains in high-speed. When you get the telephony product in there, we’re seeing net gains in video and double-digit increases in high-speed growth. CW: Interesting that the simple addition of telephony would have that effect. MM: I’m really looking forward to the rest of our telephony launches in the fourth quarter of 2006 and into 2007. CW: Is telephony just the tipping point for some people? MM: They can see the value in it. One bill. One company. Again, it’s basic blocking and tackling. CW: What can marketers do to convince the CEO to give them more money and support? MM: Prove your case. Build your business plan. Our CEO is more than willing to spend if he has assurances that the data will pay off. You know, we marketers have to be as thorough in selling our ideas as our counterparts in engineering and IT and technical operations. It’s making sure you can prove your case. ROBERT QUIGLEY
CHARTER COMMUNICATIONS
Robert Quigley, EVP and chief marketing officer for Charter, is hedging his bets on a mobile product. Instead, he’ll be pouring more marketing dollars into cable’s basic triple play. CableWorld: What’s your marketing goal over the next few years? Robert Quigley: We’re at about a 47% penetration rate right now, and our peers are more in the 50-51-52 rate. I want to close that gap very fast. And to be closing that gap at a time that we have a whole new competitor coming at us is going to be a pretty good trick. That keeps me awake at night. CW: How do you close that gap? RQ: The first thing to do is get the CEO involved in marketing, and that’s not a problem here for us at Charter. Neil [Smit] came out of AOL and not out of the cable industry. AOL is a very marketing-driven company. So Neil is very, very fond of marketing and is very aware of the marketing/business model where you’re trying to get customers on board and paying you month after month after month. As a consequence, one of our strategies to close the gap is to spend a higher percentage of our revenue dollar on marketing than Charter has done in the past. We’ve been lagging behind the other MSOs, so we’re picking that up. So we’re putting more muscle out there and getting a louder voice, if you will. CW: It must get more complicated than that. RQ: The second trick is getting that louder voice spread properly. The major strategy we’re putting in place right now is to develop infrastructure so that we can measure precisely the results of every marketing dollar we spend. That will allow us to do conventional direct-response testing, which will tell us precisely what kinds of offers work best and how many times we should be hitting people at different frequencies, etc. By doing lots and lots of testing, we’ll get clear insight into what kind of offers will close that gap. CW: So the management team’s AOL experience is important? RQ: Yes. AOL has a wonderful system that we’re just building here. The direct-response industry has had a good system for years and years and years. But the cable industry hasn’t. CW: Everything’s going on demand. How does that affect your job? RQ: On demand is going to give us insight into what consumers are interested in watching. On the one hand, it would give us a lot more understanding about the interests and desires of the consumer. But we’ve got to be really careful about how we use that information because if we start conveying to consumers that we’re following their behaviors through on demand, there will be a huge outcry in terms of privacy. So it could come right back and smack us in the face. On the one hand, it will give us some insight that we can use to understand the demographics, behaviors and personal characteristics that go together to help our targeting. It will make it more effective. On the other hand, we have to make sure we don’t step over the bounds of “big brother is watching you” and take advantage of it. CW: Is it just education—making sure consumers understand what they’re opting into? RQ: I was just the other day talking to someone who is very involved in this business, and he said he just realized that by using his TiVo for the last three or four years—that TiVo now knows everything about his viewing habits. He never even knew that. So I guess the punch line is that I’m not sure that the benefit it’s going to give us is one we’ll be able to use bottom line. CW: But people are skipping ads with DVRs and VOD. Don’t you have to do something to compensate? RQ: As we get into the whole concept of skipping ads, DVRs and VOD will give us insights into consumers’ behavior. The challenge will be—given that—we should be able to serve up 30- and 60-second spots that are more relevant to people’s interest. Then we begin to make the ad more relevant, therefore more interesting and therefore less liable to be skipped. Then on the other hand, we are using a lot of different sources, so even if our cross-channel source begins to diminish because of this, we still have all of our online, direct mail, door-to-door marketing, etc…to pick up the slack. CW: What about broadband? It’s getting more competitive. How do you market it in this new environment? RQ: The three things everybody is going to have to push are speed, value and reliability. I have really learned over the years that content in this area is not a driver. The attitude of people on the Internet is that there’s more content than anyone wants to deal with, and they can get to it all by themselves. Content does not really move the needle. But speed, the consumer experience and the reliability and value are really what create the impression. CW: What about mobility? Charter isn’t participating in the Sprint joint venture. What are your plans? RQ: We did not go into the consortium originally for a couple of reasons, neither of which had anything to do with whether we thought it was a good idea or not. We are looking in on that subject. We want to make sure that we can get into that in a way that makes sense for Charter and isn’t driven by a consortium vote. I think it’s going to be something that we eventually get into. But some of the things that have been talked about are maybe a little bit advanced. CW: You mean talk about watching TV on the cell phone? RQ: I think so, for a while. Eventually, people are going to have multiple screens that they watch content on. But I don’t think that’s something that falls into the next two years. CW: Sounds like figuring out how to bundle all of these services together creates some marketing challenges. RQ: It really does. Once we get somebody onto a bundle, the benefits are enormous and multifaceted. It certainly is the endgame of where we want to put our customers. The trick or the challenge is that it’s hard enough to sell somebody one product, let alone sell somebody three all at once. On the one hand, if we’re taking our existing [customers] who are on one product, that’s going to have certain behavior patterns that are fairly easy to deal with. Going to a household that’s not doing business with you and saying, “buy our three products,” well, the chances are they’re making a switch decision on three different products with three different suppliers. That’s a challenge. We’re going to have to experiment through our tracking systems to find out what captures our prospects’ attention and gets them to call. How do we get them on Charter and put them on a migration path to move up on the bundle? CW: Charter operates in Keller, Texas, which in 2004 was the first Verizon FiOS market to launch. What do you think about Verizon’s marketing tactics there so far? RQ: We’re actually the poster child for Verizon. Verizon has gone in there with all guns blazing. I don’t know if this is a sustainable thing they want to do across the nation or just wanted to get a full-court press so they could get a lot of publicity on how well they’re doing. One of the things they have done is that they have spent money very well. They have made claims for certain expenditures and orders that would suggest they’re spending something around 10 times what we would spend to get an order. They have raised awareness dramatically. You can’t walk around Keller, Texas, without seeing a demonstration of Verizon. They have made claims about their penetration that we can’t understand because the effect they have had on us has been minuscule compared to the success they claim. I don’t know what’s going on there. We’re not going to step up to the plate and match them dollar-for-dollar on spending. But what we need to do is go heavy, heavy, heavy on our triple play. We didn’t have telephone enabled when Verizon launched down there, by the way. CW: Any effect on pricing in Keller? RQ: It would be foolish to get into a price war with these guys. They may want to make the big splash and get a lot of press out of it. You do that by spending an unsustainable amount of money to get a good result. But it’s a good result with a high price. MICHAEL RAHIMI
MEDIACOM
Mediacom SVP of marketing and consumer services Michael Rahimi can’t afford to live in the present—his sights must always be set on the future. But that future is looking brighter now that he’s got a voice product to offer. CableWorld: Overall, what’s your No. 1 job? Michael Rahimi: Getting smarter. Staying ahead of the game. I’ve been doing this for a number of years, and what I’ve learned over the years is that you always have to be thinking ahead and several steps ahead. I’m not smart enough to know what the world is going to look like in two years or three years or four years, but I do know that I have to stay six months to nine months or a year ahead of the game and figure out what is on the horizon. CW: What sorts of questions do you ask yourself on a daily basis? MR: I focus on how we’re going to deal with all the changes. How do I keep our video product fresh and alive and new? What are we doing to enhance the high-speed product? Every quarter we’re trying to come up with something that’s significant and new to our consumers. It’s that kind of stuff that I focus on. CW: How has the shift to on-demand content changed your job? MR: It allows you and I as consumers to take a little more control over our viewing. It enhances the viewing of television. Whether it’s free on demand or subscription video on demand or DVRs, all of those applications have the same benefit. What we have been doing with our marketing methods for quite awhile is talking to the consumer about taking control of their television. It’s TV on your time, my time, under our control, more so than it ever has before. CW: But does on demand help your targeted marketing efforts? MR: It certainly makes it a whole lot more complex. We don’t have enough history with it yet to even learn how to most effectively use that. On the other hand, the positive part is that it can be more targeted. It is going to make it a lot more fun. And it is going to make the consumer able to get in front of them faster and more easily what they want and get messages that make more sense to them as individuals. Rather than throw it all up against the wall and see what sticks. Those days are gone. CW: What about broadband? What do you emphasize as a marketer? It seems to be a speed battle right now. MR: Mine is bigger, faster and better than yours without necessarily having the applications that require the additional speed. The technology coming before the application. That is beginning to change, but change isn’t there yet. We’re filling our portal with as many applications that require a big pipe, whether it’s gaming or video streaming. We’re putting in as much of that as we can—both on our home page as well as in our marketing materials. We’re trying to make the service as robust as possible beyond the bidding war of “my speed is bigger than yours.” CW: So content becomes more important? MR: I know so, although we’re only just beginning. CW: What about mobility? The big MSOs seem excited about it. How about Mediacom? MR: We’re not the leaders here. We’re the leaders in certain areas and we let other lead us in other areas. CW: So wait and see on mobility? MR: To a degree. Our markets are not the top markets. Our competitors come after us, but they don’t come after us first. With a few exceptions, we’re not top of the list on the radar. CW: For those who take the mobile plunge early, do you expect them to face any particular marketing challenges? MR: I don’t think so, as long as we continue to improve our customer service and reliability, which have both improved dramatically. As long as we’ve made that evolution from the old traditional cable operator—as long as that continues, I don’t think it will be a major problem. CW: How about the challenges of marketing the bundle? MR: It just gives us more arrows in the quiver. We’re selling more products now. In more than half of our markets, we have three distinct, wonderful product lines to sell. And that’s growing dramatically this year. It just makes this more fun, and I have more products to offer you. If you want all three, that’s great. If you don’t want all three and only want two, that’s fine, too. And if you only want one, fine. I’ll take you as a customer. CW: So you still approach it as marketing three separate products? MR: I market the bundle. There are certain segments for whom the bundle makes sense, and we’re beginning to learn which are which. And the mix is changing as quickly as the proliferation of computers and Internet access and broadband as a category. Look at the dramatic increase of how many broadband homes there are this year as opposed to a year or two years ago. CW: With all of these products to sell, how can marketers get more support from higher-ups to get more support? MR: Are you a baseball fan? CW: Who doesn’t love baseball? MR: Well, you can work George Steinbrenner and have deep pockets and be able to spend your money almost foolishly. He spends more than he needs to to buy the best team possible. I am a Yankees fan. I’m not being critical. But what we have to show is that a well-spent dollar gets the return—whether the return is reducing disconnects, increasing customer satisfaction and not needing to replace as many customers as we did a year ago, or by more finely targeting our marketing message so we get higher return for that dollar. We send as much mail on a blanket basis today as we did a year ago, but the messages have changed. I am now better able to more effectively target the different messages and get a better return for the same dollar spent. We’re learning to spend to the dollar more effectively, and as long as we continue to demonstrate that, we continue to get more funds. They’re not unlimited. I’d love to get more money than we have. I’d be a fool not to. CW: What about Bell companies’ push into video? Has that changed how you guys play the marketing game? MR: They are all reacting fairly strongly. Some are different than others. Even the same RBOC is acting differently in different markets, depending on their local flavor or on how much of a competitor we are in their footprint. How much flexibility they have. If we’re 2% of their market, then they pay less attention to us than if we’re 40% of their market. CW: So no real answer to that? MR: I’m not evading or avoiding the answer as much as I’m saying that it’s not a single answer. We face Verizon. We face Qwest. We face SBC/AT&T. We have lots of independents in some areas. CW: But as a marketer, do you mostly react or proactively change your strategy in those markets? MR: Well, we were reacting until we got the voice product. We now have phone in 1.5 million homes passed adding another 900,000 this year. Once we got the third product line, then we became far more proactive because we had the triple play and hopefully the wireless product at some point as well. As long as we had the two products, it was more reactive to prevent any erosion. But once phone is there then it’s definitely more proactive than reactive. It has been the RBOCs and phone companies that have been more reactive to maintain their telephony market share. We’re doing to them in phone what DirecTV and Dish did to us with video 10 years ago. JOSEPH ROONEY
COX COMMUNICATIONS
As the top marketer at Cox Communications since 1999, SVP Joe Rooney has helped sell everything from broadband and phone service to video on demand and HDTV. Rooney says integration and bundling remain the keys to cable’s marketing success. CableWorld: How does on demand change the marketing equation? Joe Rooney: In an on-demand world, marketing becomes a requirement to drive program views. It’s sort of surf to search. The channel-surf mentality becomes the content-search mentality. CW: What kind of opportunity does that present in terms of targeting ads? JR: The opportunity for on-demand programming is for content to become more personalized. On demand can become more of a destination. You can look at usage and put the content that’s more relevant to that community closer to the consumer and make it easier for them to get access to it. Hopefully, down the road we’ll have the ability to allow the customer to personalize their on-demand portal and get access to the material that they value the most. CW: Doesn’t on demand make it easier to skip over advertising? JR: I’m not an ad sales guy, but I think there’s an opportunity to allow customers get a deeper dive into products their interested in, within an on-demand world. But I don’t think the 30-second spot is dead. It will live on in on demand as well as linear form. You’ll see 15’s and maybe they won’t be grouped together as much so it’s harder to fast-forward through them. People will find ways to get their advertising in front of the consumer. There’s no doubt. CW: Broadband competition is heating up. How can cable market itself as the better alternative? JR: The reason that customers buy broadband hasn’t changed in years. They choose it based on speed and price, and they keep it for the utility of always-on. But there are a lot of other factors that come into play as this market gets increasingly saturated. Customer service is one. The fact that we won the J.D. Power award as the best high-speed Internet provider in the nation and PC Magazine‘s reader’s choice award three years in a row points out that people really value quality service, quality care and reliable service. PC Magazine pointed out that some of our competitors had more bells and whistles but that customers still thought our product was best. We want to be the trusted provider. We embrace that. We communicate that to customers through a brand promise to be your friend in the digital age. We really feel that what customers want is somebody to help with them with these increasingly complex products. Look behind your television set. A couple of years ago, it was a cable line and power cord. Today, you’ve got all of these devices connected to it. You’re using a lot of different connections. It’s a very complex place. You need somebody to help you with that. Customer service isn’t just a friendly person on the phone. It means a lot more to customers. CW: What about mobility? How does that change the marketing game? JR: We’ve got one and a half million phone customers, so we’ve been able to convince customers that we’re much more than a cable company. And so the challenge for us as marketers is to think about how people use their mobile devices. In the home, you’ve got longer periods of time without distractions. You can spend longer periods of uninterrupted time watching television or reading your e-mail or chatting on your telephone. But when you’re on the go, you’re looking for a short, intense burst of information. We talk a lot at Cox about Bundle 2.0, which is moving beyond the bundling of marketing, care and billing of a product and to really bundling the products together. So you never want to disconnect Cox’s wireless product because you would lose how well it integrates with our Internet, VoIP and video products. CW: So do you have to market everything as a bundle these days? JR: I think you have to always market individual products and the bundling advantage together. You can’t just do one or the other. If we thought our video products just needed bundling to make it strong, we wouldn’t have invested so much in high-definition, DVRs, on demand and ITV. We have the best video products and the best bundle. I think in the past that many marketers have confused bundling with discounting. Bundling is not discounting. Bundling is giving customers great value and giving them great integration. One bill. One company. One appointment. Moving forward, bundling is integration of the services, integration of the products. Mobility is a great example of that. I really want to be able to tell my DVR to record a specific program while I’m on the go, if I forgot to do that. CW: How has Verizon’s rollout of FiOS in several Cox markets changed the marketing game for you? JR: Clearly, I don’t want to show my hand to my competitor. So the best I can say it is that we intend to be the strongest competitor they’ve ever seen. CW: But is Cox being reactive or proactive in those markets? JR: A marketer has to be nimble and be both proactive and reactive to be successful. We are both proactive and reactive in how we market against the RBOCs. CW: How do cable marketers get the resources they need from the CEO? Is the industry doing better in that area? JR: If you want to convince your CEO to spend more time, effort and money on marketing, you have to show them the money. Quite simply, if we can’t prove that our marketing investments and activities make the company more money in a reasonable time frame, then our CEOs shouldn’t be wasting their time on it. We’re lucky to be in a subscription business with high fixed costs because that’s a relatively easy environment in which to forecast the lifetime value of a customer and show what the next customer adds to earnings. It’s much easier than having anonymous customers buy toothpaste at retail. We know our customers, and we know what kind of value we can get in marketing to them. CW: As a cable marketer, what keeps you up at night these days? JR: We’re in such a terrific business with so many growth opportunities, one of our main tasks is to determine where we invest. We do so well in capturing share in video and high-speed Internet. And every telephone customer we get hurts the bad guys. We have an amazing B-to-B business that is just growing in a terrific way. So one of the biggest challenges that keeps us up at night is prioritization.

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