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Cord Cutters Gain More Choices while Providers Gain More Headaches and Opportunities

Brian StantonMay 05, 2014

The latest multi-year agreement between Amazon and HBO to bring many of the premium channel’s greatest shows including The Sopranos, Six Feet Under, and The Wire to Amazon Prime Instant Video expands the options for Cord Cutters.  Why is this deal more important than all the others?

Headaches:  A 2013 JP Morgan study found that a stand-alone premium content service such as HBO Go could sway 62% of those on the fence about cord-cutting to drop their existing cable service.  Cable companies leverage this stickiness to build special bundles.  In November 2013, Comcast introduced XFINITY Internet Plus, a double play package featuring 25 Mbps Internet, Limited Basic TV, HBO, HBO Go, and Comcast’s TV anywhere service, Streampix.  Time Warner Cable took a slightly different approach with a basic TV and HBO offering, primarily promoting the service to its existing Internet customers.  Verizon featured a hologram-style card that showed “HBO” and “only $10 more per month” through the envelope window.  While lowering overall price, these strategies maintained important video subs.  Now it appears that one more anti-cord cutter tactic has been lost.

Opportunities: Cable has a unique opportunity to respond to a rapidly fragmenting media landscape and consumption patterns by leveraging its immense customer data to create exciting new products and packages.  It can also leverage this data for far more creative and targeted marketing techniques versus the still prevailing geo-targeted mass direct mail.  The first step is to actively embrace the available data about their customers and about their behaviors and create actionable proactive targeting models.

Acxiom works with many leading telcos and cable players to create tailored solution that leverage data and sophisticated modeling to create business opportunities.  We have built a cord cutter propensity model that scores the US population and can be custom tailored to individual companies.  The bottom line is that it has worked – for one telco it outperformed the next-best source by 25%. Acquisitions resulting from the model had the lowest “marketing cost per gross add” of all list selection models used across multiple channels.

We took an independently sourced phone company’s lapsed wireline customer records and back-test validated it with these results:

BS cord cutter chart

 

 

 

 

 

 

How it has been used:

  • Targeted likeliest cord cutters with an incentive to cut the cord and sign up for wireless service
  • Targeted likeliest cord cutters with a retention offer to reduce relationship churn
  • Also great to use in targeting “Cord Nevers” with bundled Broadband offers