DirecTV Pulls Ahead, Thanks to Lovable Russian Oligarch

After ceding a bit of ground to rival Dish Network over the past few months, DirecTV has regained some turf.  Earlier this month the nation’s largest satellite TV provider posted a second-quarter net gain of 100,000 U.S. subscribers while its increasingly feisty, smaller rival Dish saw its first drop in net new customers after more than a year of increases. Part of that success came after DirecTV matched Dish’s offer to waive extra fees for HDTV programming. DirecTV has just launched its largest ad campaign ever for its out-of-market pro football package, NFL Sunday Ticket, and the company’s “Opulence, I has it” pitch featuring Russian oligarch Gregor has become a viral hit. Paul Guyardo, DirecTV’s chief sales and marketing officer, discussed new initiatives and offerings. Excerpts of the conversation appear below.

Brandweek: Tell us about new advertising for NFL Sunday Ticket, which is reportedly getting $100 million in support, and a record-breaking buy in Sports Illustrated?
Paul Guyardo:
We don’t talk about spending, but year on year it has not gone up materially. [Last year, DirecTV spent $419 million in measured media, per Nielsen.] Rather than spend more, we’re spending smarter. What’s different this year is the work taps into key consumer segments. There’s the displaced fan, a New Yorker living in L.A.; guys who follow fantasy football leagues; and those consumers who want to watch games on laptops or smartphones, a new package benefit. With print, just because it’s the most pages we’ve bought. doesn’t mean it’s the most expensive. Last year we bought in ESPN The Magazine and in SI; this year we consolidated in SI.

BW: How is your advertising strategy evolving? There appears to be more emphasis on value, and it looks like you’re avoiding celebrities after Dish went after you for that.
I haven’t given any direction to become more focused on value. We have always been and continue to be a premium TV experience. With Opulence, Gregor is a premium consumer who can afford the best but is looking for a great deal. We haven’t dropped celebrities; the voiceover in one of our current sports is [Sideways actor] Thomas Haden Church. As part of Sunday Ticket, we’re tapping into our relationship with Eli and Payton Manning.

BW: Can you update us on DirecTV’s digital and social strategies?
The big thing was having the Opulence commercial go viral. As of today [10 days ago], we’ve had 1,052,000 hits since the spot was released two weeks ago. We’ve allowed Gregor to take over our Facebook page. The response has been amazing, with 89 percent positive sentiment from YouTube comments and the blogosphere. We already have two spoofs of the spot. Even Wall Street picked up on it. On our earnings call an analyst congratulated [DirecTV CEO] Mike White on the spot going viral.

BW: Please elaborate more generally about your use of social.
We have primarily used it for information and communication, less about actively trying to acquire new customers or retain them. I don’t think online consumers want to be sold in through social media.

BW: What is your breakdown between direct marketing spend and media marketing?
I can’t break it out for competitive reasons, but direct is significantly more. You can figure it out on your own. If you look at the number of new customers we had in 2009, someone in America is signing up for DirecTV every eight seconds. We have a very integrated program. TV commercials do a fabulous job creating the brand image and are supported online. We invest in a tremendous amount of paid search. We have a significant direct marketing group which is comprised of standalone mail with millions of pieces. There are Sunday FSIs, shared mail, affinity programs with everything from the Boy Scouts of America to American Express. All of those direct initiatives represent about 50 percent of our total sales.

BW: Subscriber acquisition costs have been on the rise. Can you give us perspective as to where you see those costs going?
I can’t comment on where it is going, but I want to point out that the $700-plus number we report has three components. Marketing is a piece of it, but we also include the hardware we install and free installation of it. We have tried to push HD equipment, DVRs and broadband connectivity, which require additional equipment. That leads to higher average revenue per unit because those customers are more inclined to buy pay-per-view movies, premium channels. And because they’re having a more satisfying experience,  people react to it. 

BW: Earlier this year, DirecTV consolidated its ad business at Deutsch, N.Y., and you’ve also added another agency partner, Grey. Can you clarify the scope of each agency’s assignments?
We are a $20 billion company in the U.S., and our advertising department will produce, on average, between 30 to 40 spots a year. It’s not uncommon for a business of our size to have more than one agency. Both are doing outstanding work, and both have spots running in the third quarter. The “Opulence” spot was produced by Grey and is running more in general media; Deutsch created the Sunday Ticket work, which is more visible on cable sports channels.