Interactive Commerce Less Remote

Mar 26, 2007  •  Post A Comment

Television pundits have for years waxed eloquent at trade shows and on industry panels about the capability to order products via TV using a remote control. But few cable operators have deployed the technology.

Now, Cablevision says it will introduce that capability to its entire 3 million-plus customer footprint within a year. The operator created a new division called the Digital Marketing & Commerce Group, whose job is to develop new advanced services and advertising opportunities to leverage Cablevision’s digital footprint.

One of the first orders of business for this new unit will be to develop and deploy the technology to let customers order products directly with a remote control while watching an ad.

Advertisers have been eager to experiment with interactive ads because they have been proven to engage consumers more deeply. However, cable operators have been sluggish to roll out the technology to enable such interaction. Cablevision’s new division, if successful, could represent a big step forward for interactive TV.

That’s because Cablevision’s New York-centric footprint allows the operator to introduce new technologies to a large market all at once. Also, the commerce application is a logical next step in interactive TV that moves beyond existing interactive ads that let consumers request more information.

Ready to Play

Cablevision is well-positioned in this regard because of its success so far in signing up customers for the triple play of phone, video and voice services.

Cablevision currently counts 2.4 million digital cable customers, a 78 percent penetration rate, and more than 2 million high-speed Internet customers, for a 45 percent penetration rate. Cablevision said those penetration rates lead the nation among cable operators. That’s the foundation on which the operator plans to build its new advanced advertising business.

“Cablevision has been very successful in the triple play and has some of the highest [average revenue per subscriber] in the business,” said Todd Chanko, media analyst with Jupiter Research. “This isn’t so much jumpstarting a digital strategy but a means of profiting from an already valuable digital strategy.”

Cablevision appointed Patricia Gottesman, who has been with the company for 28 years, to head the new unit. She’s been bumped up to executive VP of digital marketing and commerce after serving as the senior product development and marketing executive.

“We are interested in leveraging our fiber platform and the depth and breadth of our customer relationships in a way that will enable us to develop new businesses in the commerce and advertising fields,” Ms. Gottesman said. “That means being able to sell directly to our customers through television and online advertising and enabling our customers to buy merchandise to have delivered to their home.”

For some ads, Cablevision will add the ability to make a direct purchase from a 30-second spot. Consumers aren’t likely to buy a car with a remote control, but they may be interested in buying consumer electronics, she explained. “We would love it if the Apple iPod would advertise with us. Consumers understand what the device does, they probably already have one and may be considering buying another. … The consumer would be able to have an iPod delivered to their home and ordered on their credit card in a very basic and simple customer experience.”

Her division expects to deploy this capability in the next year. She’ll spend the next several months ironing out details and evaluating both technology vendors and homegrown solutions.

Cablevision already has built the infrastructure to handle consumer purchases. In the last year, the operator processed about 600,000 orders through the remote control for its additional TV programming, such as premium channel upgrades, purchases for subscription video-on-demand and orders for Optimum Online, the operator’s high-speed product. Those usage statistics played a large role in deciding to start the new division.

“We have taken some serious comfort from the ease with which our customers have adopted interactive ordering and at-home fulfillment,” Ms. Gottesman said.

But this type of commerce capability is new and untested, so it’s wise to tread carefully, experts said.

Feeding the Appetite

“This is an area we are going to have to test to find out,” said Rob Aksman, director of creative development with Brightline ITV, a firm that specializes in interactive TV marketing. “With respect to T[elevision]-commerce, there is probably an appetite for it because I think there is always an appetite for impulsive type behaviors. The bigger question is what types of products and experiences are the best use of T-commerce.”

But Cablevision doesn’t need a huge number of customers to order products for the service to be successful, Mr. Chanko said. “This is incremental revenue,” he said.

Cablevision also plans to offer more branded interactive channels to advertisers, as it has done with American Express and Jet Blue. In addition, it plans to expand its interactive channels in such categories as autos and homes.

Cablevision Snapshot

  • 3.1 million cable television customers

  • 2.4 million digital cable customers, representing 78 percent penetration
  • More than 2 million high-speed Internet customers, representing 45 percent of homes passed
  • More than 1.2 million voice (VoIP) customers, or 27 percent of homes passed
  • Source: Cablevision, year-end 2006