Cable industry's stubborn woes

CTAM conference turns to new marketing concerns, but old ones still need fixing

It's not just the new marketing challenges that cable operators have to grapple with. Sometimes it's just the same old songs.

That's what cable marketing executives will be discussing this week, when marketing trade association CTAM convenes its annual conference in Boston. Despite the dramatic collapse in attendance of most other industry trade shows, CTAM has registered more than 2,300 attendees, about the same as last year's conference though down 7% or so from two years ago.

The highlight will be an appearance by Viacom President Mel Karmazin, who is speaking at a general session Tuesday.

Cable operators face several new marketing issues: the high churn rate among digital cable customers; packaging and pricing of video-on-demand product (à la carte, subscription or free? commercial-free?); and a coming wave of tech-based products like HDTV and home networking.

The broader issue is how to lift cable marketing to other consumer products' level. Cable marketing still uses a mass, shotgun approach, rather than targeting messages more carefully.

To CTAM President Char Beals, cable ops haven't really exploited marketing methods used by the airline and credit-card industries, for instance.

"The big newer marketing issue is really an older issue: how to ratchet up the sophistication of cable marketing," Beals said. "The companies say they're doing these things. The people in the field are saying, 'Great! Where are the tools?'"

There's also flat-out confusion. The coming high-speed cable data standard, DOCSIS 2.0, will allow customers to network computers, stereos and other appliances through their cable set-tops. The trouble is few people, including consumers, grasp why anyone would want such a service.

But there are plenty of big, immediate issues that aren't at all obscure. Digital cable has been a big success, with penetration exceeding 20% of basic homes. But even five years after the first deployments, operators face a stubbornly high 5%-7% monthly loss of digital subscribers. Many are lured by discounted offers but are unimpressed by the dozens of additional channels. Is the product priced too high? Is the entry price too low, bringing in trial customers that don't really want the packages? Or is the selection of networks just too lame (five flavors of MTV, anyone?)?