When it comes to marketing, cable is still at the crawling stage. Given the industry’s maturity and the level of competition cable operators endure, you could argue, as many have, that at this stage MSOs ought to be more sophisticated about selling their wares. Yet walking appears close at hand. At least that’s the consensus of several experts who believe cable operators’ sophistication and execution of marketing efforts are far better today than they’ve ever been. MSOs, these people say, are getting a lot savvier about marketing their products — and themselves. This is very good news indeed. Cable operators have never really marketed themselves well. Programming services have, though, and so they’ve always had the upper hand on the marketing turf. MSOs have depended heavily on the programmers’ creative and their budgets to hype their own service. Even operators themselves grudgingly admit that until recently marketing was not one of their better skills sets. “Ten years ago the level of [marketing] sophistication was nowhere near where it is today, and it didn’t have to be,” says David Pugliese, Cox Communications’ VP of sales/new product management. “The extent of marketing then was to stimulate demand for multichannel video. Companies today have expanded their organizations to step up to new challenges. I think cable gets the most-improved award for marketing [its] products.” Indeed, the tables are turning when it comes to cooperative marketing efforts for some MSOs, particularly Comcast, now the industry’s 800-pound gorilla with over 22 million customers. “In the past when we’d do co-op marketing campaigns, we’d use the network’s creative,” says Dave Bologna, VP of marketing for Comcast in Detroit. “Now we do the creative and the network’s work with us.” Que Spaulding, president of distribution at Starz Encore, puts it this way: “There have been a lot of good marketers in this business. But MSOs’ marketing efforts haven’t been stellar — until recently.” Still, operators could benefit by becoming more innovative and aggressive, says Bruce Leichtman of Leichtman Research Inc. Marketing cable services, he says, is more than just selling the newest bell or whistle. “I think one of the reasons DBS providers always score better in satisfaction studies is the fact that consumers feel they had a choice in picking that service,” Leichtman explains. “They don’t feel they have a choice with cable, and cable operators don’t stress that enough. They’ve spent all the money to upgrade their networks and have all these services to offer. They should talk about that proudly and repeatedly.” However, new services are the key to selling a company’s worth to consumers, asserts Josh Bernoff, a senior analyst with Forrester Group. He’s not convinced that overall corporate branding campaigns are necessary — or even successful — unless there is a product or service to sell along with it. “People forget that GE’s ‘GE Brings Good Things to Life’ campaign was a tag line attached to product ads and only recently has the company tried to sell its image as a stand-alone campaign,” he says. “Big corporate branding efforts make me nervous. They’re difficult to measure and they usually are associated with solving reputation problems. Microsoft is doing a lot of that these days because they’re trying to repair a reputation as a monolithic and monopolistic bully. Cable’s reputation problems — mostly service related — can’t be solved with an advertising campaign. They have to be solved by providing better service and delivering on their promises.” Cable operators have rarely spent the time — or money — necessary to really brand their companies’ names and images, says Michael Goodman, an analyst with Boston-based Yankee Group. “There have been plenty of attempts but no one has provided a constant theme or message,” he says. “That has allowed consumers to build their own perceptions of the industry and their local cable company rather than the cable operator actively shaping those opinions. It’s put the cable operator on the defensive, which is never a good place for a marketer to be.” Some MSOs have become better at promoting themselves than others, Goodman says. He thinks Comcast and Cox are doing the best when it comes to corporate branding initiatives. “Right now companies like Adelphia [Communications] and Charter [Communications] have other things on their plate that require more attention,” he says. “But eventually they’ll get up to speed, too.” Cox launched a new branding campaign last summer with the tag line: “Your Friend in the Digital Age.” “It’s a promise to our customers that we will continue to use our advanced technology and expertise to bring customer-friendly, cutting-edge products and services to their homes,” said Cox’s SVP of marketing Joe Rooney at the time. Pugliese says it’s a way of telling customers that Cox is not only the choice for high-tech services, it’s the place where customers will get high-touch service as well. Meanwhile, Comcast has hired four-time Tour de France winner and cancer survivor Lance Armstrong as a company pitchman. The idea: Convince customers that Comcast’s drive for excellence and success matches Armstrong’s. It helps that the Tour’s annual coverage is carried exclusively by Outdoor Life Network, which is owned by Comcast. “Lance [Armstrong] was a great learning experience for us,” says Dave Watson, Comcast’s EVP of marketing/customer service. “We initially used him to introduce the AT&T markets to Comcast. But the feedback was so positive we’re reevaluating our use of brand-only marketing. It wasn’t just Lance. It was a combination of him and our hardworking employees showcased in such a way that customers got the idea that these people are focused on providing the level of excellence that Lance represents. It was so successful we’re looking at taking it to another level. We’re not losing sight of the fact that it’s the new products that create buzz but we also don’t want to forget how important our presence is in the market.” Cable One VP of marketing Jerry McKenna agrees. “We have to make sure our customers know what products we have to offer,” he says. “But we also need to enhance the image of our brand to build trust and loyalty with our customers.” Like most operators, Cable One has historically concentrated on selling its products rather than its image. But that’s slowly changing, McKenna says. “We’re shifting our focus with advertising and public relations efforts pushing the concept that we are consumers’ trusted provider of the best products and services. We also want to fight the notion that the only thing cable has to offer is high prices. We can’t sit by idly while regulators and competitors tell consumers we’re the high-priced solution.” Comcast’s latest campaign points up some of the economies of scale operators can finally take advantage of now that the industry has consolidated as much as it has over the last few years. MSOs’ budgets haven’t changed much in the last decade but they are able to take advantage of their size, vertical integration and geographic range, which translates into a more efficient and effective marketing plan overall. “I think our budgets are reasonable and in line with what we need to do to sell our products and services,” Bologna says. “The budgets haven’t changed much. But in the last two years we went from serving 500,000 customers in the Detroit area to 1.4 million, or over 90% of the market. Mass marketing is now realistic, efficient and effective.” The total amount MSOs are spending on marketing is up because revenue is up. But most operators say they’re not spending any more percentagewise (most spend between 2% and 4% of total revenue on marketing) than they did ten years ago. The big difference today is scale and reach. Consider this: Comcast serves residents in 17 of the nation’s top 20 markets. Clustering during the 1990s consolidated entire markets so now one or two operators serve an entire DMA whereas ten years ago as many as a dozen MSOs might have had pieces of a single market. Moreover, operators are marketing more smartly, Leichtman says. It’s not how much money MSOs spend that counts, Pugliese agrees. It’s where the money is spent that matters most. “As we move away from mass marketing and use our databases to better target our audiences, we may need to shift where some of the money goes,” he says. “New product launches going forward may have smaller audiences and so we need to use more finesse and it may be necessary to make some shifts in marketing budgets. But I don’t think we necessarily need to spend more to be effective.” Leichtman and Goodman aren’t quite convinced. Both believe marketing budgets for cable operators remain lower than they should be, especially considering the level of competition the industry faces today. “The amount of money operators spend on marketing today is one of the industry’s biggest challenges,” Leichtman says. “The industry has always been on the low end of the spending pendulum when it comes to selling their services. In the early days, all they had to sell was one product. Today they have several and they have competitors that are selling much the same thing and spending more to sell them.” Many operators are hiring ad agencies to handle their marketing efforts, making the ads more slick and professional looking. “When I worked for Continental Cablevision ten years ago, I was doing the voice-overs for some of our ads,” Leichtman says. “Thank goodness the cable industry has gotten more sophisticated and slick. But they have to continue farther down that path if they want to compete effectively against DBS and the RBOCs [Regional Bell Operating Companies].” Goodman concurs: “Competition from DBS opened a lot of operators’ eyes when it comes to spending time, money and energy on marketing,” he says. “But they’re going to have to become even more sophisticated marketers if they want to go up against the RBOCs. That means spending more money and concentrating on their image today rather than waiting for the telephone companies to do the same thing the DBS companies did to cable — create the perception, leaving the cable operators on the defensive.” Perhaps the most important ingredient in a successful marketing campaign is a desirable product that consumers will clamor for. And cable finally has that piece of the puzzle in place, Bernoff says. “Part of the problem for operators wanting to sell their products in the past wasn’t a marketing issue at all,” Bernoff argues. “Digital cable just wasn’t all that good. It didn’t really offer people anything new or anything they really wanted. But now, the product is worth selling. There’s VOD and HD — these things appeal to consumers. That makes marketing the product easier and ultimately more successful.” Cox had to change its corporate culture completely when it began offering voice, video and data services in a bundled package. That meant everything and everyone in the company had to have a new emphasis on things such as customer care and network reliability, Pugliese says. Cox brought in talent from outside the cable industry to help it move away from being a one-trick pony to a multiproduct marketing company. It’s working. Today, over one-third of Cox’s customers take more than one service from the MSO and the numbers continue to grow, Pugliese says. “We look at marketing as a three-tier package,” Pugliese says. “First, there are brand-only ads, and we do a significant number of those. Second, there’s product benefits and attribute ads. Lastly, there are product acquisition ads. These are things like instant install offers. We have less product-specific ads and more bundled-product ads. We consider that brand reinforcement because it makes our customers aware that we’re not a single-product company.” How do you successfully sell consumers on new and often complicated services without totally confusing them? Products like video-on-demand and high-speed data connections are easier to sell if consumers can experience them firsthand. For years, that meant door-to-door sales teams swamping neighborhoods to hawk their goods like the Fuller Brush salesmen. The tactic isn’t dead, and cable operators still rely on door-to-door sales as a top sales tool to add customers. However, many operators are also finally getting hip to the idea of letting other experts sell their products. Several MSOs have joint and/or co-marketing deals with local consumer electronics stores around the country. It’s the best of both worlds for both the retailers and the cable operators. The retail store salesmen have something to hook into their cool, new electronics. The cable operators can lean on the retailers to sell their products, often at a fraction of the cost of selling door-to-door. They also have something to hook their cable services to as a sales incentive when a consumer comes into a store to buy a TV or computer. Comcast has several such arrangements around the country. The MSO expanded its retail strategy in Detroit in May when it cut a deal with ABC Warehouse, a locally owned retail chain with 16 stores, to sell HSD services as well as digital cable and hi-def subscriptions. ABC Warehouse already featured Comcast’s high-speed data product so the expansion into other products was easy for both companies. “As a new products company, it is important for Comcast to give our customers the opportunity to experience our products and services before they purchase them,” said Kevin Gardner, VP of sales/marketing for Comcast’s Midwest Division at the time the deal was announced. “Retail outlets provide the opportune venue for this interaction. ABC Warehouse has been a great partner for our high-speed Internet service, so it is natural that we team with them to showcase our digital cable and HDTV products.” A similar program with Best Buy was expanded by Comcast earlier this year. Best Buy stores in several Comcast markets, which already sold Comcast’s HSD subscriptions, are now offering consumers a co-branded sales activation kit that goes for $79.99 and includes free service installation, two months of free HBO and Showtime and several pay-per-view movie coupons. The kit is free when a customer buys an HDTV set from Best Buy. The offer is valid for new Comcast digital cable customers, including those upgrading from analog cable. Customers also can sign up for Comcast digital cable as a stand-alone service for $29.99 at Philadelphia area Best Buy stores. The retail experience enables customers to try out the new services rather just hear about all the cool things they do, and consequently people are more likely to buy advanced equipment and services, operators say. Of course, MSOs can now also rely more on their own outlets and services to sell other products. For instance, Internet websites have become a very effective marketing tool for cable operators. Cox has a little green pig icon that twirls around its website touting the company’s “hot deals.” Click on the pig and up pops two companywide deals — one for digital video and another for broadband Internet service. Type in a specific ZIP code and up pops the local system’s specific deals and discounts. It’s the 21st century’s version of cross-channel spots, which still remain one of the most successful and widely used marketing tactics used by cable operators today. But successful marketing is more than just a bunch of shiny new toys and a repeated message. “It’s providing a good product at a reasonable price point,” Goodman says. “It’s a presence in the community. It’s good customer service.” Indeed, marketing can’t stand on its own, asserts Leichtman. “If you’re promising good service or you’re attacking your competitor’s service, you better be delivering on your promises and do what you say you’re going to do or it’s all going to backfire.”

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