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Vice President|GM|International|Multiplatform Video Communication|Integration|Distribution|Strategy|Programs|NYC|Toronto
Very good piece Herb. Thanks for this. And you are absolutely on the money on this.
Business Development at Cisco Systems (USA) Pte. Ltd.
Superb..
Pre Sales & System Delivery Manager - South East Asia at ATEME
Fantastic read
Full title of post ---- 7 Rules for Marketing Technology That People Want and What to Avoid (or Killing the 7 Sacred Cows of Marketing Pay TV)
I recall a book about “Sacred Cows Make the Best Burgers”https://alvarodalcanton.wordpress.com/2013/03/18/book-summary-sacred-cows-make-the-best-burgers/
Based on that I came up with some marketing ideas that have outlived their purpose and should have met a similar demise long ago. Particularly with pay TV
1. The “Field of Dreams” strategy. Cable TV began as a build and they will come business. In the early days of cable their purpose was to extend broadcast viewing markets. There were nominal monthly charges running as low as $3.50/mo. Broadcast was happy to extend their programming with no (rebroadcast) costs just for the additional market opportunities for their advertisers. The failure to limit the cost of content (primarily sports) by advertisers has allowed operators to increase their subscriber rates with impunity. Now they are reaching the tipping point. I have always found an above average, reasonably priced, product with outstanding service will beat overpriced, great products, with average or below service. No one buys a Porsche to drive to a Wal-Mart. Cable found that when satellite, severely lacking in a triple play solution, got 30% of the market. Similar things are happening today with OTT and IPTV with cloud based set top boxes and mobile device based remotes
From CED magazine May 1999 article I wrote
https://sites.google.com/site/cuoirent/mergers-and-acquisitions
History
So why has cable become so ambivalent about managing and effectively gathering subscriber interests and responding to those needs? From the beginning, cable TV represented a “Field of Dreams,” in that cable operators would build a system and the subscribers immediately came—there was sufficient pent-up demand to attain high percentages of viewers from the homes passed. TV viewers in remote locations were watching snowy pictures and receiving no more than one or two distant stations. Reactive marketing has led to complacency and a false sense of security. Some industry observers may argue that cable operators simply had it too good. Others surmise that they just had to focus on the myriad number of operational issues that were, quite simply, more important at that particular time.
Have things changed?
2. Build a better mousetrap and the world will beat a path to your door. We’ve seen many times that the second mouse gets the cheese. All you have to do is research Bill Gates and his acquisition of DOS, and how he priced and marketed it. The rest is a history of second guessing.
Not uncommon today to find companies who spend millions on a system and then let the market get away from them. Similar to “Field of Dreams”, only illustrates the consequences. That’s happening in cable TV and newer products such as Internet of Things. How many successes today are easily identified with people who had more promotional (marketing) skills than technical skills – Gates, Jobs, Bezos, Zuckerberg, Ellison, etc.?
From CED magazine May 1999
Can you imagine having the ability to enter a personal preference profile into an application so that the TV not only directs you to your preferred program, but also gives you pertinent advertising information on products and services of interest much like Amazon.com? Allowing consumers to provide input about upcoming programming schedules via e-mail or through an on-screen guide is an incredibly powerful tool that the Internet offers.
Have things changed?
3. Innovative naming and promoting of a product or service name for a product that took millions to develop without doing a simple spell check. I recall a couple of products that marketing chose the names – Intelecable and allyant, if you spell check them, you get intolerable and alienate.
Key objective of pay TV working with “Internet of Things” is modularity “best of breed” with interoperability and a horizontal platform. Just like the spell check example, many companies who spend millions on a product fail to create the correct identity and brand. They fail to spend money on a marketing plan. Even if they do, they fail to have the discipline to execute it.They fail to promote, promote, promote, and determine how best to leverage and measure results from social media.
From CED magazine May 1999
One of the most innovative television products to flop was introduced in the late 1950s. The combination of TV, AM-FM radio and phonograph was an ill-conceived experiment in integration. It might have made for a nice piece of furniture, but unfortunately, the color TV was being rapidly improved and replaced every two years and the phonograph was evolving to 8-track tape (and later, to cassettes and CDs) and the radio, well it could last forever.
Then, modularity became the king. Similarly in the SMS (subscriber management services) arena, there have been several attempts to develop all-inclusive products that have never seen the light of day (e.g. Tele-Communications Inc.’s Summitrak, CSGS’ Phoenix project, etc.). Problems, as well as the expense, to integrate and coordinate computer code, technologies, and software releases to cover diverse businesses such as cable TV, telephony and data became prohibitive. Now convergent SMS providers must be willing to work with system integrators or function as integrators or enterprise resource planners (ERP) to provide total solutions built from modules. Bill Gates states in his new book – Business @ the Speed of Thought – “that as more standards evolve … the more likely the ‘best of breed’ tack will be used to buy independently the best product modules available instead of buying from just one vendor “.
Happening in pay TV and Internet of Things
Have things changed?
4. Using anecdotal data or outdated data collection methods to justify marketing strategies. Failure to use analytics and metrics to measure results.
Many times today pay TV relies on subscriber counts and fails to recognize revenue losses.
Social media allows collection of subscriber information valuable for analyzing and improving quality of content and customer experience. The failure to be proactive in the execution of improved customer satisfaction will result in high churn. Churn creates substantial operating expense and marketing expense, including tier and premium discounts, to get a subscriber to reconnect. They are not adequately measured.
From CED magazine May 1999 article
“Systems who focused on subscriber retention, without a concern for total subscriber revenues, are losing another quiet war with DirecTV. Systems sometimes keep their low-end basic cable tier business but lose their premium channel (HBO, Showtime, Cinemax) and pay-per-view revenue due to the DBS content selection and digital picture and sound. Potentially 50% of the systems revenue could be lost even with 100% subscriber retention. Customer preferences were underestimated and poorly measured and monitored. Because of inadequate subscriber preference data and a resulting slow response to digital technology, much revenue was lost and immeasurable damage was done to subscriber relations.”
Have things changed?
5. If it’s not broke don’t fix it. Keep the marketing plan that has always worked in the past.
ESPN is $7 for suite soon going to $10. Cable subs are subsidizing that content with 30% sports addicts and the remaining 70% casual or non-sports sub soon paying a $1 billion a month. Having a company like Google 100% ad supported should bring a much needed new model perspective. Also the ap supported (aka PPV) model of Apple could bring some new models as well as it did to music. Same with Amazon and Vudu via Walmart who made their businesses grow rapidly through being low cost and customer friendly.
From CED magazine May 1999 article
Competition from the Internet for the subscriber’s disposable income has no geographic limitation. Multimedia content on the net will improve rapidly over the next two to three years. Primitive forms of movies are being tested through sites such as ifilm.net. Broadcast.com, recently purchased by Yahoo for $5.7 Billion, broadcasts music and video events on the Internet. The swirl of activity illustrates “how quickly the Internet is changing from a text-and-graphics medium to a multimedia experience”—Eben Shapiro, staff reporter for the Wall Street Journal.
Have things changed?
6. Keeping the same marketing strategy nationally and internationally – failure to adjust to local culture. Many times you will need established partners in countries and various sections of the country. One size doesn’t fit all. We live in virtual communities that transcends country boarders.
My thoughts from an international business development article that I wrote on ways to market globally --Some of the wrong ways include – trying to sell and support directly, lack of understanding of the local culture and laws, failure to meet local requirements, underestimating localization, and failure to determine which selling techniques works better – top down or bottom up?
Very important to form agreements with integrators and distributors based on USD and USA laws, and then let your in-country partners deal with their clients based on in-country laws, currency, and cultural requirements. Even companies as large as Wal-Mart have run into legal problems attempting to sell direct (e.g. Mexico).Smaller companies can’t afford that mistake.
7. Marketing that doesn’t capitalize on the value of behavioral marketing and targeted sales.
We see many highly successful models from Amazon to Google to Facebook to Twitter that provide their services free in trade for personal preferences.
The obvious alternative, with the least cost to implement is an independent Cloud CRM solution designed to cross index cable subscriber households with their corresponding social network interests. The current regulatory and privacy issues experienced by cable TV operators gathering unauthorized data from set-top boxes could be minimized, by validating subscriber and even eliminated by essentially having an opt-in plan (provided conveniently by the social media). Access along with profile and interests of households would be controlled by the subscriber’s social media platform of choice. Facebook has high consumer acceptance and could be used for household profiles, product interests, social interests, and viewing entertainment interests. There would be incentives to the subscribers to opt-in including notification and reminder of viewing favorites, Groupon type ads, and specific ads matching interests with infomercial type group discounts and urgency to buy.
The current design of target marketing advertising ventures is fundamentally flawed. They focus on demographics, and fail to identify the individual behavioral current and future household interests.
Project would involve developing a bidirectional Cloud interface program using a CRM application between the social media and MSO subscriber records and communicating behavioral marketing - business advertising, discounts, specific videos/groups, family albums – providing subscriber awareness of TV programming -- movies, products, etc. similar to Amazon and Groupon. This would make subscriber stickier and substantially reduce turnover.
To paraphrase a comment I made in the CED 1999 publication about the Internet, cable TV operators need to become the new best friends with the over 1 Billion members of social media.
Cable has long history of failing to develop 1-1 target marketing. Canoe Ventures (MSO venture) was touted as the Holy Grail of targeted advertising and was less than a success
http://tech.fortune.cnn.com/2011/01/03/the-56-billion-ad-question/
Excerpt from above link on January, 2011 Fortune.com –
“Advertisers will spend $56 billion putting ads on TV this year...The cable industry thought It would be a big opportunity too, but its efforts have fallen short. Canoe Ventures, a two-year-old project of the six biggest operators, launched just one notable product…”
From CED magazine May 1999
The revenue gold mine could come from the ability to substantially reduce the costs of direct marketing via mail and telemarketing by providing, for a price, the one-to-one retailing data gathered by knowing the buying habits and preferences of customers. This is another byproduct of transitioning to the digital era.
Have things changed?
If not, they better, otherwise they’ll become known as the best “buggy whip” marketers in the business
Why should your company have a global business development strategy? - May 19, 2011 2:48:8 PM