Bringing scale to U-verse has been an issue, however. A year ago, AT&T CEO Randall Stephenson told investors of U-verse at the Goldman Sachs Communacopia conference that "it's doing everything we had hoped. I think we can scale that business very quickly."
Slowly adding households
But in the 15 months since that statement, U-verse faced unseen competition from other cable and satellite operators in breaking key markets, thus forcing AT&T to scale back its year-end projections for 2006 from 15 to 20 markets to just two. But U-verse regained enough footing this year to finish out 2007 in just less than 8 million units in 34 markets. With the service adding around 10,000 new installations per week, U-verse could easily add another 6 million to 10 million by the end of 2008.
"Adoption right now is huge for us," said Hestia Lei, executive director, U-verse member marketing and programmer management. "The brand is very important for us to get out there and make sure the customer is aware we are looking to be an entertainment company, more than just a communications company."
But already under way is a unique effort to build brand awareness through a wide range of branded properties, including VOD-like "barker channels" dedicated to AT&T content such as Front Row; U-guide, a monthly entertainment magazine for members; Yellowpages.com TV; and Swampstock, a three-screen content provider that launched an ad deal with JPMorgan Chase earlier this year.
Tim McGraw concert
In the case of Swampstock, Chase was able to sponsor a series of behind-the-scenes concert clips from Tim McGraw's summer concert tour, with cross-promotion across the AT&T Blue Room (the original source of AT&T's branded-entertainment efforts prior to U-verse) and Mr. McGraw's own website. Although a subscriber base of 126,000 in mostly smaller markets isn't exactly the mass reach national advertisers are looking for when they set out to do major integrated campaigns, Ms. Hei said the multiple touchpoints and the ability to localize certain elements of the campaign for each market helped make for a more attractive sell.
"You want to have and create more legs for these campaigns, and not just in one specific area," she said. "The more you propagate through these different areas, the better chance you have for frequency."
Although a new set of success metrics is still being drummed up for the Chase deal, Ms. Lei sees future ad deals taking on similar models, with just as much focus being put on the cellphone and other non-TV properties as the network component itself. Cynthia Biamon, a producer for Digital Kitchen, U-verse's creative agency, argued that the current U-verse audience made it that much more ideal for marketers to experiment with campaigns. When it comes to new ideas, she said, "advertisers are too afraid when they're talking to 20, 30 million people. When you're talking to 1 million people, they say, 'Let's go ahead and try.'" She thinks 2009 will be the banner year when more full-scale branding opportunities will become a reality.
Getting closer to consumers
But since cable TV is just as much a local business as it is a national reach opportunity for marketers, the emphasis on many of U-verse's campaigns is to bring the marketers as close to the consumer as possible. Don McNeill, president of Digital Kitchen, said, "We can now provide the ability to sponsor an event like a Dave Matthews Band concert, then go on Blue Room, send people from the barkers to cover the concert, get exposure there, and then create opportunities for the barker that extend to your phone and retail. It's a lot less expensive and a lot more one-on-one."
The other main marketing hurdle on U-verse's immediate horizon? Figuring out a way to efficiently summarize its many features for consumers without overwhelming them.
"You want to talk so much about all the crazy things you can do, but consumers just want their lives simpler," Mr. McNeil said. "They just want to know their TV works, and their phone works. The look and feel of everything we do is to be as simple, clean, basic and colloquial, not talk down to everyone or be contrary. We know you're smart. It is about you and you can do all this array of stuff, but that's up to you."