In the not-too-distant future, Home Box Office will send U.S. households e-mail offers with full-motion video files attached, which viewers can then open on their combination TV-Internet monitors to preview HBO programs. The campaigns may also contain hyperlink alerts allowing viewers to click over to an HBO server for a live, streaming video sample of one of a dozen HBO and Cinemax channels.
Sound like something George Lucas dreamed up? Think again.
“This is not blue-sky Star Wars talk,” says John K. Billock, president of the U.S. Network Group for HBO and Cinemax.
High-speed broadband networks are now being built throughout the country by HBO parent Time Warner and its cable television competitors, Billock notes, so that by 2005 these “fat pipes” will reach the great majority of U.S. households, carrying full-motion, digital-quality sound, pictures and video, and transforming the home entertainment experience.
Not to mention the direct marketing experience. In anticipation of the convergence, HBO marketing executives are working with cable operator affiliates nationwide to build e-mail databases of cable television subscribers and nonsubscribers alike. Billock believes marketers at HBO and its competitor networks will soon have to start thinking in parallel platforms-interactive Internet and linear TV-to maintain the relevancy and vitality of direct marketing. “As consumers move back and forth between linear and interactive platforms, marketers will be able to do highly engaging, sophisticated marketing, for instance to use one platform to set up sales, the other to close it,” he says.
As a result of this convergence, direct marketing will move to the “sexy side” of marketing, Billock believes. “Ginsu knife telemarketing will soon give way to the marriage of direct marketing with the elegance and creativity of broadcast television.”
Billock’s world is one where cataloging becomes full-motion video in the home, enabling customers to shop conveniently and seamlessly from their living rooms. Marketers are also enabled to send finely targeted offers, like sending buyers of an Alanis Morrisette CD a video promo for a Jewel CD, with a “buy” button for instant purchase. “Static platforms like direct mail, telemarketing and cataloging will turn into full-motion dynamic platforms,” he projects.
In the meantime, while cable conglomerates like Time Warner continue to lay the fat pipes and Internet service platforms like WebTV speed up the promised convergence, HBO is relying on traditional, aggressive direct mail and telemarketing campaigns as its two large tactical components to sell subscriptions. The network’s primary target is U.S. television viewers who don’t subscribe to cable television, accounting for 55% of HBO’s direct marketing activity. Cable television subscribers who don’t subscribe to HBO or Cinemax represent the other 45%. Olivia Smashum, vice president, subscriber marketing and business development, says the network undertakes between three and five direct mail campaigns a year, representing roughly 120 million pieces in 1998. Its telemarketing initiatives are just as aggressive, with HBO targeting 7 million cable subscribers in the first quarter of 1999.
For its direct marketing campaigns, HBO utilizes databases maintained by its cable operator affiliates. For direct mail, this means HBO must tailor its pieces for as many as 1,200 different participating cable operators. HBO ships the tailored pieces to the cable operators, who lettershop and mail.
Smashum says the network typically ties its direct marketing campaign into image and programming initiatives, like the current “Titanic” campaign, which plugs HBO as the only cable network airing “Titanic” and other box office hits. “A strong offer allows consumers to re-examine their purchase decision,” Smashum says, “and gets our cable affiliates more focused on selling us.”
One current HBO technology project is allowing the network to work closely with some of its cable affiliates on a sophisticated Internet service. Beginning this summer, HBO will allow cable television subscribers in a few markets to “self-install” themselves through HBO’s Web site. A cable television subscriber will be able to go to the HBO site, subscribe to HBO, then switch their cable television tuner to HBO and instantly see a descrambled picture. “It’s a cool use of a platform that will become more intrusive,” Billock says.
Billock, whose responsibilities include affiliate sales and operations, consumer marketing and market planning, believes projects like these are putting HBO in a strong position to wield the power of the new, converged media. He sees the direct marketing platform of the future as broadband networking in the home, with Internet technology as its core.
“This is not a direct marketing afterthought. It will be ramped up very quickly over the next five years to be a major platform for direct marketing efforts,” Billock says. “And those companies preparing to use the robustness of the high-speed platform will have an incumbency position on that platform.”
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