Aiming to Blunt Satellite's Edge

Cable World, Sept 8, 2003

Byline: ANDREA FIGLER

Listen up cable operators. EchoStar Communications has a little secret when it comes to selling satellite service to Hispanics.

It's called Playboy TV en Espanol. It's the only premium network on EchoStar's basic Dish Latino Dos package. And it's arguably the first adult network included in a basic multichannel video tier.

At a cost of $31.99 per month, this package is the "most popular Spanish-speaking package offered to consumers in the United States," said Richard Yelen, VP of marketing for Charter Communications, at the Cable & Telecommunications Association for Marketing conference in Seattle this summer. "It's deemed very effective and kind of like their secret hook as far as differentiation."

Of course, Playboy TV en Espanol is not the only element of the "most popular" Hispanic television package. EchoStar has many unique Hispanic networks, price points and marketing tactics. Yelen and his colleagues have been dissecting exactly how EchoStar and its satellite sister, DirecTV, target the fastest-growing ethnic market in the country.

They have to. Satellite has the lead over cable when it comes to targeting Hispanic subscribers.

Scarborough Research found that Hispanics are 7% more likely than the rest of the country to have a dish on their roof. At the same time, they're 13% less likely to subscribe to cable compared with the average U.S. consumer, according to data measured from August 2001 to September 2002, the latest available.

This disparity between satellite and cable is only amplified when considering the Hispanic population's explosive growth. Cable operators can't let this market get away from them.

In fact, in a week or two, Charter plans to launch a national campaign with bilingual ads, just in time for Hispanic Heritage Month and the celebration of Mexico's Independence Day. "It's not revolutionary for cable but it is the beginning of something big for Charter," Yelen said.

The cable operator has hired an undisclosed Hispanic ad agency and two new executives to help create national ads as well as local marketing campaigns targeting Hispanics. "The best thing we can do on a marketing basis is grassroots," Yelen explains. "Cable is like old radio in the sense that we can project something on a local basis like no one else can."

While he won't reveal the particulars of the planned grassroots campaign, Yelen's research into satellite's Hispanic marketing efforts may shine some light on things to come for Charter. For example, EchoStar won praise from Yelen and other cable executives for sponsoring a lunch for employees of a rug manufacturing plant in Dalton, Ga. The satellite provider bought lunch for the plant's mostly Spanish-speaking Hispanic employees, during which it explained its Hispanic packages and offered to sign up the workers for a subscription right then and there at an extremely low price. No driver's license or credit cards were required.

And EchoStar sponsored this lunch on exactly the right day - payday - said John Vonk, VP of marketing for Comcast Corp.'s West division, who also spoke at CTAM's conference in July.

"It is probably one of the most brilliant things they could have ever done in reaching out to that community," Vonk said on a panel on Hispanic marketing.

Grassroots campaigns are already under way for Comcast. The operator is sponsoring events such as Fiesta Broadway in Los Angeles, which celebrates Hispanic culture for Cinco de Mayo. Comcast has hired Castells & Asociados, a Hispanic advertising agency, to help create culturally relevant campaigns.

"We're educating people on what cable is offering," said Alfred Valdez, EVP and account director for Castells & Asociados. At these community events, Comcast rolls out a truck showing Hispanics the advanced services cable offers such as high-definition television and video-on-demand.

Comcast's divisions in California will also launch some new retail agreements with undisclosed brick-and-mortar companies targeting the Hispanic community in about a month, Vonk told Cable World. The idea is to insert Comcast's product in a place frequented by Hispanics, making it easier for them to pay their bills and order new services if so desired.

But one of the best ways to beat the dish at its own game is to convert its front men - independent retailers who target Hispanics - to the cable side. In essence, cable could prompt satellite retailers to pull a sort of Benedict Arnold.

Vonk has already begun this process. He said he has agreements with several satellite retailers to sell Comcast's Hispanic packages as another choice for consumers looking for multichannel Hispanic programming. While Vonk would not release the names of the retailers or any further details about the agreements, he said they are excited to sell cable. "It's just a business arrangement with another distributor," he said. "It's better to be in a [sales] channel than not be in that channel just as long as it's a cost-effective channel."

Satellite traitors and grassroots lunch deals aside, traditional marketing to Hispanics works well despite the naysayers, Vonk said. He can prove it. On May 5, Comcast's California division launched a massive campaign targeting Hispanics. It invested $550,000, funded by Comcast corporate, in direct response television ads, radio commercials and direct mail. All of these venues, which were touting its new package of ten Spanish-language channels for $19.95, fit within traditional marketing standards.