CHICAGO Long the only game in town when it came to extended television offerings, cable companies are finding themselves in a changed environment. As they broaden their offerings, the competition has increased and now includes telephone and wireless companies. And with the proliferation of satellite television systems, cable companies are seeing more competition on their core business.
To cope with these changes, the nation's two largest cable companies are enlisting traditional advertising agencies to hone their messages. And, not to be outdone, satellite TV provider EchoStar has restarted an agency search for ideas regarding its Dish Network, according to sources.
In October, Stamford, Conn.-based Time Warner Cable tapped WPP Group's Ogilvy & Mather, New York, to build the brand as it begins to offer a variety of video, high-speed Internet and phone services in its markets. Billings for the assignment were estimated at $50 million.
And last week, four agencies-Omnicom's DDB Chicago and Goodby Silverstein & Partners in San Francisco, Interpublic Group's Deutsch in New York and Dallas independent The Richards Group-presented their ideas to help Comcast Cable move from being perceived as merely a cable company to an entertainment company, according to sources. Billings for that assignment are also estimated at about $50 million. A decision is expected by the end of the month.
"It reflects the fact that they're no longer one-trick ponies," said John Mansell, a senior analyst for Kagan Research in Fairfax, Va., describing the spate of recent agency hirings. "They're [now] providing video, audio and telephony."
However, the cable companies have been steadily losing ground to the satellite companies. For the first three quarters of 2004, cable lost 464,000 subscribers, while satellite providers increased by 2.3 million subscribers, according to Leichtman Research Group in Durham, N.H.
Not content to simply collect disgruntled cable customers, EchoStar has begun contacting agencies about a project for its Dish Network, according to sources. Though the size and scope of the project could not immediately be determined, sources said the search resumes a process that began earlier this year but stalled in May for unknown reasons [Adweek Online, May 19].
At the time, the company was said to be considering three agencies for a branding project: Publicis Groupe-backed Bartle Bogle Hegarty in New York, Interpublic Group's Campbell Mithun in Minneapolis and independent agency The Romann Group in New York, which has handled projects for the company. CM media subsidiary Cash Plus Media Services handles media duties for EchoStar.
It could not be determined whether those agencies were involved in the restarted process. Agency officials either couldn't be reached or declined comment. A representative would only say that the company meets with agencies "all the time," and would not confirm that discussions about a project had resumed.
"Our primary goal right now is to educate consumers about the high cost of digital cable and the current rate increases," said EchoStar representative Marc Lumpkin.
EchoStar's current advertising for its Dish Network features two hipsters questioning people about why the prices of certain digital products-like cameras and watches- have gone down, but the cost of digital cable has gone up. The campaign was believed to have been created by The Romann Group, though the shop would not return calls and Lumpkin would only say that a "consortium of people" contributed to the campaign.
When EchoStar began contacting agencies in March, client officials were mostly concerned about competitor DirecTV, which has more subscribers and better retail distribution, according to one source familiar with the review.
"They believed they had a better offering," the source said. "They were trying to compensate for the disadvantage by creating price-oriented ads battling cable TV."
As of Sept. 30, 2004, DirecTV had nearly 13 million subscribers, while Dish had just over 10 million. (By contrast, Comcast has nearly 22 million subscribers, while Time Warner Cable has nearly 11 million.)
DirecTV's advertising from Omnicom's BBDO in New York touts the service's wide range of offerings and features a DirectTV installer ticking off the list of services that a customer has signed up for (such as a season pass for NFL games).
But with a greater number of offerings and a desire to be perceived as more than just a utility, the cable companies are fighting back, hoping to become a one-stop destination for all entertainment needs, from television to the Internet. In the face of this, EchoStar's Dish (and DirectTV as well) may have to show that they're about more than merely better rates and product offerings, said Kagan's Mansell.
"The way that they have been [marketing] has stressed pricing and product," Mansell said. "Maybe [they need] to stress that they have alliances with phone companies and high-speed Internet services."
—with Andrew McMains