|DirecTV CMO Paul Guyardo frankly discusses his role in a highly-competitive advertising category.|
In a recent interview, Mr. Guyardo, whose experience includes CMO posts at HSN and Kmart, discussed how he's managed to stick around, how he views the competition and DirecTV's advantage, and why he isn't threatened by mobile content platforms -- yet.
Advertising Age: You've already gone beyond that dreaded tenure mark at which a lot of CMOs these days seem to lose their footing. To what do you attribute your staying power?
Paul Guyardo: Well, my first CMO gig was at HSN, and I was there for eight years. It's important to really make sure that your role and your responsibilities are tied very closely to quantifiable metrics. HSN had a very robust transactional database. It wasn't really being utilized. It was back in the day when everybody wanted to focus on big branding commercials and, really, direct marketing was kind of a stepchild. But we saw an opportunity there, and it was very easy for us to show very quantifiable results. Barry Diller was our chairman. And he always cared about how we spent. I learned a tremendous amount from him. So I think that's why Barry kept me around for eight years -- not because he particularly liked me, but because we made money. And now at DirecTV, again, the role is very much clearly defined. If anybody wants to see how Paul and his team are doing, they can just look at our quarterly earnings report, and it's pretty clear.
AdAge: Previously you were CMO of Kmart. How did your experiences at a big-box retailer translate into now overseeing marketing for a satellite TV provider?
Mr. Guyardo: A big part of retail is learning how to read and react, and to make adjustments to the plan based on what the competition is doing and based on how the economy is doing, based on whatever external or internal factors that may exist.
AdAge: There's a lot of forward thinking that has to come into play.
Mr. Guyardo: A tremendous amount. And that skill that we acquired both at HSN and at Kmart has played very, very nicely at DirecTV for a couple of reasons. Three years ago, the marketing strategy was pretty much to have this one national marketing strategy. The reality of it is that the competition is local. The competition is not national competition. The competition is Comcast. It's Time Warner. It's Cox. It's Charter. It's Fios. And you've got to be able to really understand what's going on and understand where things are heating up geographically, where they're dialing off, and read and react and adjust your plans accordingly.
AdAge: How has the economic downturn affected your marketing strategy? Are subscriptions down in any respect because of the economic downturn?
Mr. Guyardo: Well, actually, in our first-quarter earnings, which we just reported, we put on 275,000 net subscribers. It was an all-time high for us. Our churn was at a 10-year low. So I don't want to say that we are recession-proof, but I will say that we have not been dramatically affected by the recession. Right now is a time when people don't necessarily have those discretionary dollars to go out to entertainment outside of the house. And so now more than ever, they're turning to their television as a source of entertainment. And at the end of the day, DirecTV is an exceptional value. I also think the other reason that potentially we've been somewhat less affected than perhaps our competitor, the Dish Network, is we have really focused in the last two and a half, three years on going after a quality customer; someone who has a little higher household income -- $60,000, $70,000 a year -- someone who has a family, a job, a good-quality customer. We put our customers through a tremendous amount of credit screens before they get on the platform to really make sure that they are someone who's going to pay their bill every month.
AdAge: Have you had your marketing budget cut recently because of the recession?
Mr. Guyardo: No.
AdAge: Have you had to change your creative? Have you altered it to shift from, for example, focusing on quality to price in the past several months?
Mr. Guyardo: DirecTV stands for the best television experience, and our tagline is "There's good TV, there's better TV and then there's DirecTV." And so we always try to talk about something that's relevant in the best space. For the last year plus, as you know, it really has been our superiority in HD. Now, we've maintained that, but we have also integrated in a spot in which we talk about us being the best value.
AdAge: What's DirecTV's strategy for winning the ad war in your category, where there's so much noise?
Mr. Guyardo: Well, fortunately, we were out there first and foremost, we were out there with the HD message. All of our awareness studies would suggest that people clearly do understand that DirecTV is the undisputed leader in HD. The other thing that we do all the time in our direct-mail pieces, our solo mail pieces, our Sunday FSIs is we always take the time to put a side-by-side comparison chart in there to really set the record straight and to make it very clear in black and white that you might hear all of these ridiculous claims that they're out there making, but these are the facts.
AdAge: Your latest TV ads poke fun at the cable companies. Why humor and why that strategy and why that direct, taking-on-the-competitor strategy?
Mr. Guyardo: Well, you know, humor has always been part of what the brand is about. We did try a slightly different tactic with this new campaign. You could probably characterize it as negative advertising, but we're a strong believer that if you're going to go in that space, you've got to do it with a wink and a nod. You've got to do it with humor. It has to be in good taste, and you can't cross the line and get, you know, downright nasty. And we think we have struck the happy balance.
AdAge: Who's your agency, by the way?
Mr. Guyardo: Deutsch. They do a tremendous job. They were agency of record many years ago, long before I was at DirecTV. And then I brought them back in January or February of 2006.
AdAge: What are you doing in the digital space? How are you leveraging social networks, for example? Blogs?
Mr. Guyardo: First and foremost, we're a big believer in keyword buys; 90% of our online spend we're spending in keyword buys. We've tried the banner ads. They don't work for us. The keyword buys really do deliver a very good, quality customer and a very low cost per activation. To the degree to which we go beyond keyword buys, we are working with NBC.com, Fox.com, whatever, where we're actually integrating a regular spot into their episodes of "Lost" or into their episodes of "24." And we find that those are working very effectively for us as well, because the viewer has to watch those spots before they can watch the episode. And then, I think the third place that we'll continue to invest in is what I would call enthusiast sites. We're just getting ready to start promoting in July our NFL Sunday Ticket, which is that exclusive sports package that we have where people can see up to 14 games every Sunday vs. only four on cable. We'll go in and we'll buy fantasy-football-league sites, ESPN. We'll go and just buy in places where we know we're talking to a hard-core enthusiast. We really haven't gone into the social-networking sites yet because it's not really where our demo is at.
AdAge: You say it's not your target right now, but just looking ahead, Gen Y -- some of them don't watch TV. Period. They're finding their content in other ways on other platforms. How will DirecTV continue to reinvent itself to keep up with that?
Mr. Guyardo: People are not necessarily watching television anymore at a predetermined time. One of the things that we will continue to push in the immediate future is offering one of our world-class DVRs into every home. We offer it for free to every new subscriber. We're exploring mobile devices so that people can take their television with them. I guess those would be sort of where we're heading in the future, and then continue to focus on expanding our leadership in HD.
AdAge: Do you worry about being made obsolete by -- even though it's lower quality -- TV that you can have anywhere you want simply by logging on to your laptop, opening your iPod, using your cellphone?
Mr. Guyardo: I'm not worried anytime soon, because at the end of the day, I think that delivering a quality television experience, which is really what we're all about, is not about watching an episode of something on a mobile phone just yet. It is,
I think for the foreseeable future or certainly for the next three CMOs, really about ... you know, people are still investing a ton of money in big, flat-screen TVs, HDTVs. The growth has definitely leveled off, but the growth is still there. And I think they want a quality picture on their 50-inch plasma.