Dish Network Wages War Against DirecTV With New Campaign

No. 2 Satellite Provider Says Rival's Subscribers Pay More Because of Money It Spends on Celebrity Endorsers

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NEW YORK ( -- Move over Microsoft and Apple, Verizon and AT&T: Another marketer war is heating up.

In an aggressive commercial that broke during this past weekend's Grammy broadcast, the Dish Network alleges DirecTV subscribers pay more for service due to the long list of celebrity spokespeople DirecTV has enlisted for its ad campaigns.

The 30-second spot -- created in-house by Denver-based Dish -- shows two rivaling flat-screen TVs, panning between them. A female voice-over says: "Last year, DirecTV paid for Peyton Manning, Kim Basinger, Denis Leary, Tom Arnold, The Black Eyed Peas, Charlie Sheen, Beyonce, David Spade, L.L. Cool J, Christina Aguliera and Hellboy, while Dish Network didn't have any. Maybe that's why on average DirecTV customers spend over $175 a year more than Dish Network customers."

It closes by saying, "Dish Network -- lower price, no paid endorsements, better value. Why would you ever pay more for TV?"

The latest strategy comes under Dish's chief marketer, Ira Bahr, who took over the post in February 2009. The BBDO, New York, vet has worked with the Englewood, Colo.-based Dish off and on since 2000, and spearheaded the company's side-by-side competitive approach starting last June.

This latest commercial, however, is a move that seems to have launched an all-out war between the two satellite-TV providers.

"Like other category leaders, we enlist celebrities to help reinforce that DirecTV is the premium brand," said Jon Gieselman, senior VP-advertising and PR at DirecTV. "But the assertion that our customers pay more because of these endorsements is simply ridiculous. It's just more smoke-and-mirrors from Dish because, if you look at independent industry data, Dish actually spent more money on advertising than we did during the last two quarters. To point out that countless talented entertainers want to be associated with DirecTV and not Dish, during a celebration of the year's achievements in music, seems a little tone deaf."

Interestingly, Kantar Media (formerly known as TNS Media Intelligence) pegs DirecTV's U.S.-measured-media spending as not all that far off from Dish's outlay; during the first 11 months of 2009 DirecTV spent $375 million and Dish $350 million.

But Mr. Bahr disputes those figures. "There's no way we spent $350 million last year," he told Ad Age, adding that DirecTV spends twice the amount on marketing that Dish does. He declined to estimate what Dish spent in 2009, however.

Dish's decision to embark on an attack campaign against DirecTV is a bold one, but at the same time, an aggressive strategy of some sort is probably needed to give it a chance to compete in the satellite-provider race. Dish has long been a distant No. 2.

At the end of third quarter, Dish trailed DirecTV 13.9 million to 18.4 million in total subscribers, and DirecTV is the No. 2 pay-TV provider in the country, second only to Comcast (and ahead of Time Warner Cable). There is some evidence, though, that comparative attack ad strategy is working. When Mr. Bahr took over, the company was about to report its fifth consecutive quarter of subscriber loss, losing 90,000 during the period.

Dish is showing its first signs of growth in over a year, achieving its first quarterly subscriber increase in five quarters during second quarter 2009, and adding 241,000 additional customers in the third quarter. A recent report from Wells Fargo analyst Marci Ryvicker anticipates both companies will continue to add subscribers in fourth quarter when they report their earnings later this month, estimating an additional 177,000 customers for DirecTV and 180,000 adds for Dish.

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Last September there was buzz in adland that Dish was talking to shops to work on creative advertising. But now it looks like the marketer doesn't plan to appoint an agency of record anytime soon, instead producing its competitive ads in-house and pursuing a new crowd-sourcing approach.

"We are constantly evaluating and reevaluating all of our vendors," Mr. Bahr said. "I'm not sure we at this particular moment have someone who is awarded this marriage to us. These marriages tend not to last long, even if you call it [agency of record]," Mr. Bahr said. "I think we're very practical, and use a range of vendors. The ones that make the most sense and continue to do a good job will last the longest with us."

Recently, Dish has been working with local agencies such as Denver-based crowd-sourcing agency Victors & Spoils, on a "below the line" basis, with plans to roll out more formal work in the near future. The company has also consulted with companies such as Impossible Pictures in Denver and Spring Creative in Connecticut throughout its crowd-sourcing process.

"It's interesting to observe the range of freelance talent that is available," Mr. Bahr said of the company's crowd-sourcing experience thus far. "There's a world of creative talent out there that can be harnessed in a way that's very valuable."

Heading into 2010, Mr. Bahr said Dish will devote more resources to advertising, and to expect more ads that compare Dish to its competitors both satellite and cable. Up next, the company is considering a "taste-test" approach, where consumers will be asked to spot the difference between pay-TV providers on two different screens. If they can't tell the difference, Dish will then be revealed as the cheaper option.

Mr. Bahr wanted to convey a similar message with the Grammy ads, pointing the finger at DirecTV's growing roster of celebrity endorsers. Although Dish has used celebrity spokespeople in the past, most recently former TBS comedian Frank Caliendo, the company has opted to take a more tactical value-based approach to its messaging under Mr. Bahr.

"To fight over who gets the best or most expensive celebrities is not a fight we want to have," he said. "We want consumers to make a clear, rational, well-thought-out choice between brands. Usually when you're using celebrities, you're trying to add value to the brand beyond the product itself."

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