In the run-up to the first phase of digital cable conversion by June 2012, MSOs and DTH operators are fighting a pitched battle to build brand preference. Their weapons are ads.
With the deadline for the first phase of digital cable conversion round the corner (June 2012 for four top metros) there is a major battle brewing between Cable MSOs (Multi System Operators) and DTH players to build brand preference. While MSOs have to build their brand awareness along with the task of educating LCOs (Local Cable Operators) and consumers about the digital shift, DTH operators want to take this opportunity to grab high-ARPU (Average Revenue Per Unit) customers and increase the platform’s reach in larger TAM meter markets. Media experts see advertising spends in the sector to almost double in the coming four months’ time.
Annual advertising spends of just DTH players are estimated to be around Rs 600-650 crore. According to industry sources, the top three cable operators have already earmarked around Rs 40-50 crore for the period January to June 2012 for their brand-building exercises. “Given the price wars and combo offerings by cable operators (like HD + DVR boxes), the cable operators may be more aggressive compared to the DTH players. The current DTH category media spends will increase and may just about double in the coming months. And in terms of messaging, it will be about creating a differentiation – be it price advantage, technology, value added services or product packaging innovations,” says Vanita Keswani, COO, Madison Media Sigma.
Den Networks recently released a television commercial comparing itself with DTH and claiming that even though the picture quality is the same, you can save money with Den digital cable. The creative agency for the campaign is Bates 141, while the media agency on board is Madison. At the beginning of this year, Den Networks and Hathway Cable & Datacom launched a joint media campaign beginning with Delhi, informing consumers about the need to install set-top boxes by June 30 as mandated by the government. As per initial estimates, the two companies were expected to spend Rs 20 crore on the campaign.
Hathway cable has started informing consumers through paper inserts, e-mailers, outdoor campaigns and print ads in leading newspapers, trade magazines and websites. “We have earmarked Rs 250 million for marketing,” says K Jayaraman, MD & CEO Hathway Cable & Datacom Ltd. Hathway estimates its subscriber base to be around 1.5 million (including 2nd TV) in Mumbai and Delhi. The company is currently managing its advertising communication in-house and has recently identified an advertising agency which is working on its ad campaign.
Large scale ad campaigns by other MSOs which include Incable, Digicable and WWIL, are also expected to be out soon. Practical challenges for Cable MSOs is transitioning from a B2B to a B2C business which will require a lot of logistical and backend customer support. “If 70 lakh homes are suddenly switched off overnight, there will be a scramble from a logistical perspective, something that the entire industry has to be prepared to handle, not only for digital but cable operators also,” says RC Venkatesh, Chief Executive Officer, Dish TV. According to an I&B Ministry press statement, service providers in the cable industry have already placed an order of 8.79 million set top boxes under the first phase of digitization.
With cable operators raising their voice, there is no reason for DTH players to remain quiet. The advantage that DTH brands have is that in the past three to four years, they have created awareness about the category and have managed to reach around 42 million homes in a comparatively short time. Now, with more options available to the consumers, they will have to strengthen their unique positioning. Clearly, cable operators can offer similar services at a lower price point and hence DTH players will have to look at various value added services for their positioning. Subsidized HD offerings will also act as a key differentiator for DTH players as cable has yet to roll out HD services (with the notable exceptions of Hathway and Digicable).
Dish TV launched a campaign about three weeks ago with another new positioning for the brand ‘dish sawaar hai’ Penned by Prasoon Joshi, the idea of the commercial is to position Dish TV as a brand which enables the immersed passionate viewer to keep his passion alive. The company will be spending around Rs 30 crore on the campaign, which is going to be on air for about 8-10 weeks. Dish TV’s annual marketing budget is around Rs 100-120 crore. Tata Sky is also reportedly planning to launch an advertising campaign to target potential customers.
What is interesting to note is that Reliance Broadcast too launched a campaign last week with the tagline ‘choose your set top box wisely’ wherein the company talks about its various content offering along with the branding of platforms that it is available on. According to Vishal Rally, Business Head, Big CBS Networks Ltd., the real differentiation that is going to emerge amongst these platforms is actually content. “With digitization, every consumer will have a choice to pick and choose content. With this campaign, we wanted to empower consumers around the information of digitization and our variety of content. It is an operator-agnostic campaign. It is not aimed to promote any particular operator, but the entire industry at large,” he said. The broadcaster will be spending around Rs 5 crore across 26 weeks, and the campaign will be present across all reliance broadcast media platforms.
There are some brands who do not wish to be part of the current noise that is being created by brands and will come in during the last 45 days before the cable shutdown. “I think participating and creating confusion in messaging right now only postpones the consumer’s decision. Indians have a tendency to leave decisions and work until the last minute and even for digitization, we believe the actual intent to go for a digital STB would be around the last 30 days. If you have a limited budget, you’d rather spend it when people are serious about shifting to digital and not add to the chaos right now,” says the marketing officer of a DTH brand. Keeping this in mind, most of the momentum for shifting to digital will start building up during IPL and will start peaking around June 15. It is expected to carry on up to July 15-20.
In a category where there is heightened communication and too many operators, the points of differentiation reduce. We have seen that happening in the telecom space. Is the DTH Industry also going in the same direction?