Now facing video, phone and Internet competition from Verizon Communications Inc. and AT&T Inc., Time Warner Cable executive vice president and chief marketing officer Sam Howe is running faster these days, trying to win — and keep — customers. The hook? Not just bundling of voice and other services — but “one-bill simplicity.’’ Missing? Anti-dish rhetoric. Multichannel News editor of digital news Steve Donohue caught up with Howe recently to talk about Time Warner’s marketing strategy.
MCN: You’re seeing competition from Verizon in Texas and other markets. What kind of an impact does that have on your marketing strategy?
Sam Howe: As in all things competitive, you’re much faster. With regards to pricing, we haven’t had to make any great moves. We’ve been out with a $29.95 [monthly] introductory Road Runner [high-speed Internet access] offer for over a year. In the first quarter, we had our best quarter ever for Road Runner. And over three quarters, we’ve lost no share [to telephone companies’ digital subscriber line services], and where the industry has been losing about 1 point per quarter, we’ve been rock solid at 62% share in all of our markets.
So competitively, what we’re trying to do is make sure we keep our media spend and advertising message fresh; not make any big pricing moves. I will say the same for phone.
And I will say a different thing on video that may surprise you: We’ve de-emphasized ads knocking dish [satellite providers DirecTV Inc. and EchoStar Communications Corp.’s Dish Network]. The reason we’re not doing that is because sometimes those ads only serve to remind people what they don’t like about cable, and we’re really not winning the hearts and minds of people that have left us.
What we’re discovering is the best competitive move we can make to get people back from dish is to have a conversation about phone and high-speed data with them. And that’s why we’re turning away from pure knocking ads.
MCN: In the long run, are you concerned about a price war, especially once AT&T finally deploys its U-Verse video service and other products nationwide?
SH: Sure. We’re definitely worried about pricing pressure, and I don’t suggest that it won’t be there. But what we do believe we’ve got going for us are a couple of things.
We think we’re ahead on getting people bundled. We’ve done some focus group research that suggests it would take up to a $20 difference to have someone move [to another provider’s bundle of services]. We think that’s such a significant gap, that our competitors at the moment aren’t prepared to go there.
MCN: Could we ever see Time Warner or another operator offer the same price on each system nationwide?
SH: Unified offers are certainly an area we’re exploring actively, because we can create greater tonnage through all channels against that. I don’t think that we’ll need to go to uniform pricing.
It’s really hard to achieve, and it actually has too much risk in making that transition, when we could achieve most of the impact of it from perhaps doing a national promotion where we have a similar promotion that we pull into retail. That’s the area that we’re going to explore for the third and fourth quarter.
MCN: Last time we talked, Time Warner was experimenting with pitching “phone first” to nonsubscribers. Are you still doing that in San Antonio and other systems?
SH: Instead of trying to create a de facto mantra nationally around that, divisions are moving much more to using phone just as a conversation starter. We’ve really now moved to promoting the bundle more in our national advertising — meaning advertising we organize nationally and do with our divisions.
I think “phone first” is no longer the thing, but phone is most often the thing that we pitch to customers first.
MCN: When it comes down to the overall breakdown of the products that you’re pitching, are you primarily focused on marketing the bundle?
SH: We’ve maintained really our level of single-product promotion for Road Runner and Digital Phone, and we’ve modified some of the video [ads] to be much more toward HD, and a lot less toward anti-dish. Layered on top of that, we have quarterly national promotions organized nationally that now have pretty much a bundle message, which is promoting one bill in simplicity. And that’s really the hook.
MCN: After the Adelphia transaction closes, will that give you enough of a footprint to run spots on national broadcast and cable networks?
SH: It will give us greater key markets –– we’ll be 85% of Los Angeles, instead of being 15%. We’ll be all of Dallas. That allows us definitely to look at region-wide common promotion and advertising, and the same in the Carolinas. But the natural big metros is where we’re really looking — Houston, which was there, L.A., New York City, Buffalo, Cleveland — those are big metros that will really get some opportunity. Ironically, even in a place that seems small like Maine, while we’ve been a presence in Portland, now we’ll cover most of the state and be able to effectively buy Portland and Bangor TV stations.
MCN: Could we expect to see more ads for your Start Over service on Time Warner systems in the next few months?
SH: Yes. Six divisions have it now. 80% of subscribers use it on average about four times per month. It’s quite startling, and most [of the response] comes off the back of a bug on the [TV] screen — not because we promoted it.
People intuitively start using it when prompted. We’re about enabling the TV set, and less about our brand being about entertainment, less about all the VOD content. We’re into our innovation enabling people. That’s what Start Over is about. That’s what caller ID in the TV is about. And we think those are the things that refresh the bundle – not screaming that we’ve got more video streams coming their way. What we’re seeing is giving people more control — absolute control of the TV set, like with Start Over. We think that’s really where we’re putting our chips.
