Bringing Webby Cross-Marketing to Cable


Personalization, upselling and customized, targeted advertising — the mainstays of electronic commerce on the Web — have largely eluded the digital-cable environment.

In the decade since data mining entered marketers' mainstream arsenals, few operators if any have victoriously applied its capabilities to target subscribers with specific offers or to upsell services.

Several factors contributed to this laggard use of such marketing tools, whose value has become apparent as more layers of digital offers are added.

Hopeful software providers such as the now-deceased Commerce.TV Corp. envisioned end-to-end control over the marketing process, without permitting cable operators or programmers to own the data about subscriber preferences or media purchasing proclivities.

Other enhancements, such as the interactive service offered by Wink Communications Corp., bring the MSO into the picture, but include a limited range of upselling and data-capture capabilities.

And dynamic marketing ventures are inevitably tied to billing services, which keep track of customers' purchasing patterns, such as pay-per-view and video-on-demand.

Data's tricky

But, as a top executive at one of the big three cable billing vendors (Convergys Corp., CSG Systems Inc. and DST Innovis Inc.) discreetly admits, these firms cannot effectively provide data-analysis and targeted-marketing services for MSOs or programmers, or follow-up sales efforts to subscribers.

He also acknowledges that the internal marketing efforts of many MSOs often consist solely of "spray-and-pray" campaigns: blasting an identical sales message to all subscribers and hoping that it hits some of the right prospects at the right moment. That certainly doesn't capitalize on the customized marketing lessons learned from e-commerce and data-mined mailing lists.

Against that convoluted background and spotty track record, a few new entrants are trying to bring sophisticated direct-marketing tools to cable — drawing on Web commerce experience.

Claritas Inc., the giant marketing-intelligence company, this summer teamed up with integrated-marketing firm EagleDirect to develop a marketing package for cable operators, specifically structured as a tool to help MSOs counteract moves by direct-broadcast satellite interlopers.

The value of such an integrated sales drive becomes more apparent as the complexity of the package increases, with VOD, broadband and data — and eventually voice services — bundled together.

An upstart marketing venture, Cauldron Solutions, has also plunged into the fray with a software toolkit that's at blending the needs of MSOs and programmers.

So far, Cauldron's only customer is Cablevision Systems Corp., which has been using the vendor's software to support iO: Interactive Optimum for about a year. Cauldron says it is negotiating with other MSOs and programmers, and exploring piggyback deals with legacy billing vendors.

Cauldron's bundle of services is built around its "FlyGuide" navigation tool, which supplies programming information.

"FlyBuy Subscriber Upgrade" software lets cable subscribers add premium channels to their accounts directly, via remote control and without contacting a customer-service representative.

Its "FlyBuy Commerce" component lets cable operators offer transaction processing that can be directed to the cable bill or to a customer-selected credit card (or other payment option), thus reducing "sticker shock" for heavy users.

And "DragonFly Asset Interchange" allows content providers, such as programmers, to share digital assets with selected cable operators or other distribution partners.

Targeting ads

Cauldron president Steve Salzinger contends that this final component, DragonFly, offers cable programmers "a way to tie their existing databases together into a central database that lets customers access them through individual MSOs."

If played out in the direction Cauldron envisions, the personalization factor will allow advertisers to shoot targeted messages to individual cable customers through new virtual channels.

"As you bring interactivity and personal-profile management through the set-top box, customers are being given the opportunity to opt-in to material they want," Salzinger explained. "We're also giving consumers more control over who owns their data."

Customers can key in their personal preferences — plus billing and delivery information, based on their interests — through standard remote-control equipment.

Hence, Cauldron's service initially focuses only on existing premium channels. The commerce component allows programmers and MSOs to sell content without the fear that customers will run up hundreds of dollars of monthly cable bills, which often leads to quick churn.

"Our platform is targeted to filling in the needs of two-way interactivity, driven by each application," added Cauldron chief operating officer Russell Zack. "We look at it as a target, and focus on the needs that customers [either the MSO and/or the programmer] want to deliver to their viewers."

Part of Cauldron's challenge is customizing its software components to the rules and objectives of both the MSO and the programmer. The company has developed an automated software process, which Salzinger said can be integrated with existing ordering and billing systems within seven days.

The process, of course, also has to work with existing technology. He claims that Cauldron's software can offer services and set up a connection with the MSO's customer-services database, but does not need to reside on the STB itself.

It's about meta-data

The Cauldron package includes a security component with a personal identification number and proof-of-billing arrangements, to make sure that only authorized users can buy services through the keypad — or that kids and babysitters can't order prohibited shows. Salzinger claims that a basic Cauldron package can be deployed for less than $100,000 per system.

Cauldron's vision is to bring the sophisticated metadata services now so common in other direct-marketing venues to the cable environment. The upselling and customization features "are applicable beyond video," or to the broadband realms of telephony and data, he added.

But "the near-term opportunity is to sell video services through video distribution," he also admits.

Of course, a more fundamental challenge for Cauldron, EagleDirect and other integrated-marketing hopefuls is convincing MSOs and programmers to collaborate. Web marketers and other data miners have labored long to eke out benefits from such sophisticated software.

Whether cable providers can exploit this mega-dimensional capability awaits validation.

Contributing curmudgeon Gary Arlen opines regularly in Broadband Week.