Earlier this month, Dish Network began offering high-definition satellite TV — for free. Soon after, DirecTV (a larger rival) stepped up to offer the same thing. Such aggressive promotional maneuvering is typical for CMO Ira Bahr, who had been Dish’s svp, marketing, before doing a stint as COO of pay-per-view company New Frontier Media, then returning to take Dish’s top marketing job in 2009. Bahr’s gloves-off competitive style has paid off in the scrappy, highly competitive world of satellite TV. After losing 94,000 net subscribers in the first quarter of 2009, Dish added 26,000 in the second quarter — the first increase in more than a year — and has been steadily signing up new viewers ever since.
Editor-at-large Noreen O’Leary gave Bahr a call to ask about the turnaround and some marketing lessons he’s learned along the way.
Dish Network was among the first national marketers to “crowdsource” its advertising by outsourcing your ad brief to a freelance creative network organized by a company called Victors & Spoils. But this practice is pretty controversial within the agency community. Tell us how the process worked, and would you recommend it to other marketers?
Ira Bahr (pictured): I’ve been trying to create a new development paradigm for advertising since I returned to Dish Network. I wanted to create a network of freelancers who might develop creative for us when we need it, but managing and curating the crowd and setting up contractual relationships was very time-consuming. The value [crowdsourcing agency] Victors & Spoils adds is they create, vet and manage the crowd. If you are an advertiser who is interested in a wider range of creative, then crowdsourcing can be a viable option. But you may need assistance in doing it.
So, would you be willing to crowdsource a campaign again?
Absolutely, yes. There is no doubt you get a wider range of creative thought with a crowd. I also feel that I pay less for it.
It’s funny you say that because crowdsourcing’s critics contend that that’s just the problem — that the practice undermines the traditional agency model.
Of course it does. It’s a threat to the traditional agency model in the same way Craigslist is a threat to classified advertising, YouTube to big TV or movie production, and in the same way the Web creates a democracy in all sorts of creative development. I don’t know why anyone is surprised that the democratization of creative development is a challenge to the traditional agency model.
With this new campaign, there appears to be more emphasis on brand advertising and less on the kind of direct marketing associated with Dish. Is that the case?
We do both. I believe all response advertising works better when there is a brand layer connected with it. It’s the difference between getting a letter from someone you know versus getting a letter from someone you don’t know. Obviously that’s a direct-mail metaphor, but it applies to all response advertising.
Why do you think the copywriter and art director on your campaign have asked to remain anonymous? Do you think it’s because there were so many people involved in the process that they felt they didn’t have ownership of the end result?
Some of the blogs I’ve read have said the creative team was probably moonlighting from their day jobs. If their employment contracts prohibit them from doing that, I don’t think they should be participating in the crowd. Otherwise, there’s no difference from the big agency dynamic where a young copywriter comes up with a concept that moves through the creative ranks and then through a director’s interpretation.
Since your return, the company has managed to not only stop its loss of subscribers but also sign up quite a few new ones. Did you achieve this through a more aggressive pricing strategy?
In the first quarter of 2009 we found there were 1.8 million people who put a satellite dish on their homes, [but] only 36 percent of them did it with our brand. For most people we weren’t even in the consideration set. The best way to change that was to go head-to-head with DirecTV. We began a campaign to sell the attributes of our everyday low prices. When you look at almost any channel, you will pay less for it on Dish Network. That campaign got us some traction, and it broke customer inertia.
It also rankled your chief rival, DirecTV, which filed a lawsuit earlier this year alleging false advertising with your “Why Pay More?” TV ads, claiming you’d mounted an “apples and oranges” comparison between unequal packages.
The spot they sued over was just a 21st century takeoff of the Pepsi Challenge, an account I was involved with at BBDO. We said, “This channel looks the same on Dish Network and DirecTV, but on one of these services, you’ll pay less for it.” They asked the judge for a temporary restraining order. The judge did not agree, and the suit was later settled out of court.
Some say the current free HD promotion is risky in that it could raise subscriber costs while lowering margins.
There’s no doubt we have some pretty aggressive price competition going on in this category. But we think we’re in a better position to do the kind of promotions we’re doing than many of our competitors. Frankly, one of the reasons is that we’ve been less successful in selling some of our premium services than our competitors have been. If it were the case that we had fewer existing HD customers than our competitors, it would obviously be disproportionately to our advantage to discount that particular product.