CTAM Focuses on Telco Bid to Deliver Video

Aug 1, 2005  •  Post A Comment

The cable industry has talked for years about the need to improve its marketing in the face of stiffening competition. But it wasn’t until last week that cable executives actually seemed serious about achieving that goal.

Their motivation: the phone companies.

As cable marketing executives gathered in Philadelphia last week for the annual CTAM Summit, it was the Regional Bell Operating Cos. that loomed large over the event. The RBOCs are spending billions upgrading their networks as part of a plan to offer video service via telephone lines at the end of the year, and this has created among many cable executives a greater sense of urgency about the need to refine marketing efforts ahead of the arrival of what many believe will be a formidable competitor.

Indeed, this year’s CTAM Summit seemed less focused on lamenting the industry’s weak marketing efforts to date and instead concentrated on providing the 3,300-plus attendees with tools that would help them battle deep-pocketed phone companies such as Verizon Communications and SBC Communications.

The CTAM Summit featured guest speakers from other industries, who were brought in to discuss how a company can reinvent itself. A Harvard Business School marketing professor discussed alternative marketing strategies for companies in mature industries. Jon Bon Jovi discussed how he has leveraged his musical career into acting stints, philanthropy and more.

Shelly Lazarus, chairman and CEO of Ogilvy & Mather Worldwide, gave a speech that emphasized the importance of cultivating brands and loyalty.

“Brands are the most valuable asset a company has,” she said, later adding that “loyalty goes to the bottom line.”

For cable, the stakes are high. Multiple system operators’ market dominance has already been chipped away by satellite operators DirecTV and EchoStar Communications, which have generated substantial growth in part by stealing cable customers. With the arrival of the phone company as a video provider comes a competitor that many believe has to make its video dreams come true or face extinction.

In a lot of ways, the Bells have little choice but to begin offering video. Their bread-and-butter wire line business is shrinking as customers dump their traditional phone service for offerings from wireless companies or cable. Profits derived from the long-distance business are dwindling as the cost of a long-distance call tumbles. And though the RBOCs have made some inroads in the high-speed data front by aggressively undercutting cable’s broadband product on price, analysts say any gains they have will be short-lived due to the limitations of the Bells’ high-speed data product, known as digital subscriber lines, or DSL. Thus, RBOC executives see video as their way to stay in the game.

That kind of motivated competitor might not cause much stir among cable executives if the industry weren’t already challenged on the marketing front. Most industry players readily admit that despite the sector’s technological advances and a plethora of new features, cable companies have not done an effective job at getting the message to consumers.

“If we’re not telling our story, plenty of people will,” Kyle McSlarrow, president and CEO of the National Cable & Telecommunications Association, told CTAM attendees. Mr. McSlarrow said later that he wanted to speak specifically to cable industry marketers because he sees them playing a pivotal role in beating back the Bells’ attempts to offer video.

Many people agreed that an area that could receive a quick fix is customer service. Ogilvy & Mather’s Ms. Lazarus said that if cable operators were to do one thing to cultivate the kind of loyalty that MSOs crave, it would be to improve the customer service experience.

The cable industry “has not done a lot to reach out to customers,” she said.