MEDIACOM Marketing Digest 22 September 2004
22 September 2004
The Number 8 Wire Approach South Korea is a fascinating example of what happens when the political will exists to
"boldly go where no man has gone before". Two generations ago the entire Korean peninsula was one of the poorest places
on earth. Today, the South at least, is one of the richest countries. And on one measure, internet connectivity, it is
streets ahead of anywhere else.
There are 30 million internet users among South Korea's 49 million people, and 23 broadband connections per 100 people.
At the end of 2003, New Zealand boasted just 2.4.
Nearly 80 per cent of South Korean homes have broadband connection, and it is truly broad. Most connections are rated at
2 Mbps (megabits per second) or higher. The Government's Ministry of Information and Communications (MIC) expects that
70 per cent of internet connections will exceed 20 Mbps by the end of 2006, and that most will be at 100 Mbps by the end
of the decade.
At these speeds, and with this level of penetration, the internet pervades South Korean society to a level unknown in
the rest of the world. Video-on-demand is commonplace, and TV channels let you download shows you've missed for about a
dollar.
Sound enticing? Sorry, NZ "broadband" doesn't quite deliver the necessary bandwidth at an affordable price. The vast
majority of residential consumers with 'broadband" are limited to a maximum download speed of 256K (an eight of the
speed of the South Korean average). At that speed, a typical hour-long TV show (48 minutes without the commercials!),
350Mb in size, takes a full 24 hours to download. In South Korea, such a download would currently take as little as 3
hours - and just three-and-a-half minutes by the end of the decade.
The limit, by the way, is not technological. If you sign up for full-speed JetStream, you can get download speeds of 6Mb
or more. The only problem: the pricing plans, which kick in after a mere 500Mb or 1000Mb of downloads. With typical
plans, that's 15-20 cents extra per megabyte. So your fabulous 350Mb TV show, purchased from the broadcaster for "about
a dollar", would cost you $70 to download!
The world is rushing towards using the internet to deliver TV channels to viewers in their lounge rooms - except not in
New Zealand.
Broadband TV needs 4 Mps to work. Soon that will drop to 2mbps because of new compression technology.
HongKong's PCCW has a service called Nowbroadband TV offering an a la carte menu of 59 channels (which you can buy one
at a time). ESPN was added this month. It has 300,000 customers.
In Paris, the French phone company is offering 17 TV channels on broadband as part of its standard internet/telephony
package.
There is some activity in Australia too. The ABC is already producing content with eight separate broadband TV channels:
news, sport, business, kids, music, comedy, media watch and, curiously, Basil Brush. And a company in Canberra,
TransACT, sells 37 TV channels streamed down the copper wires.
OK, maybe streaming TV channels and downloadable programmes aren't the most worthy side-effect of the Knowledge Economy.
But they'd be a great way to drive the uptake of broadband, and justify the infrastructure investment required to
implement faster speeds nationally.
Video On Demand has long been considered the killer app of broadband internet - and it turns out to be true. An early
adopter family of our acquaintance are already hooked on Season Two of The Apprentice. The show won't air in NZ until
around November, but the first two episodes have been screened in the US, captured via digital PVR (Personal Video
Recorder) and shared on the web. Virtually any TV show of note is available for download - no charge, no ads. It ain't a
Napster-sized problem yet, but it won't go away - and it makes a mockery of selling TV rights by territory.
As the recording industry discovered, once the downloading genie is out of the bottle, the best solution is to offer a
legal alternative. Fast, affordable broadband required, fast (did we mention quickly and cheaply?). .
>From Web To Print We're just over a week away from the launch of the initial, third, issue of the new monthly
fashion magazine, Lucire, due to hit the streets October 4th.
If you think we're confusing you more than usual, allow us to explain. Lucire.com has existed as a global fashion
website since 1997, NZ-based but communicating to the world. Magazine aspirations exist in the heart of many a website
publisher, and Lucire's principals are no exception.
In May this year, Lucire "published" the first, first issue of Lucire the magazine, as a downloadable PDF file, and
encouraged their website visitors to download and review the would-be mag.
Based on feedback from that inaugural issue, Lucire put together a second emagazine, which you can download here:
www.lucire.net/images/0408-lucire.pdf.
Now Lucire are set to launch their third issue - but the first printed issue. They'll be publishing monthly, to give
themselves a clear differentiation from Fashion Quarterly - not a problem from a supplying current content point of
view, given that they've been constantly refreshing their website for the last seven years, but something of a leap of
faith when it comes to attracting advertising revenues. Still, nothing ventured, nothing gained.
Lucire is the first fashion magazine to make the jump from web to print, and one of the first-ever magazines to make the
transition. As you'll note if you download issue 2, the publishers intend to start in print in New Zealand, and then go
international (to unspecified destinations) during 2005.
The initial print run is 20,000, and the NZ cover price is $9.45.
If your favourite website suddenly spawned a print version of itself, would you buy it? Actually, yes. Would advertisers
support it? If they can be convinced that the readers love the mag as much as they love the website. So - first port of
call, reader feedback please.
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TVNZ January Ratecard Out TVNZ released their January ratecard today (which is why we held back until Wednesday to keep
our readers up-to-date).
Cutting to the chase: the big news is that there's been no increase in peaktime average rates for TV2 this month! Yay!
And some programme costs have actually fallen - the 6-7pm hour is down 30%, and Shortland Street is down 12%.
Inevitably, to achieve a zero result, some timeslots have increased, in particular the 8.30pm slot, up 15%.
TV One peaktime rates have increased, by an average of 7%, a fact that we'll grimace about and then move on. The news
that Coronation Street will increase by 30%, however, rates far more than a grimace. Would a protest to the World Trade
Organisation be out of line?
TVNZ are flagging an average increase of 6% for the February-April ratecard, which they'll be releasing on November 11.
We'll be sending our standard stern letter to the usual suspects.
Initial bookings for January open on the first of October - in other words, next Friday. If you haven't already told us
your requirements for 2005, now would be a good time ...
Trash Yr Brnd Wth Txt Text messages are twice as likely to irritate recipients as cold calls, according to the latest UK
research, released last week by Cable & Wireless. The research was conducted among 2,000 UK consumers to understand their attitudes to technology-based
marketing campaigns.
The research, which focused upon the retail, travel and financial sectors, reveals that whilst technology creates new
opportunities for interacting with consumers, the pitfalls of misapplying these techniques can be severe. Unsolicited
text messages were more than twice as likely to irritate their recipients than a cold call if received outside working
hours.
The research, which covered the entire purchase process, identified outbound marketing as the biggest bugbear of
consumers, with 21% profoundly dissatisfied with this area, more so than after-sales service at 11%. New media marketing
techniques such as text messaging and email, whilst still a small proportion of outbound marketing spend, are growing
rapidly at 17% per annum and already constitute a £525 million industry. By 2005 it is expected new media marketing
techniques will have cannibalised 13% of the direct mail market.
"I'm inundated by text messages from my mobile phone operator, it's rubbish. I just delete them" - Mr X, 35-44, London
Short messages, shorter fuses The research reveals that time and place are critical to the manner in which consumers
receive marketing communications. Whilst the always-on nature of email and text messaging make them ideal for instant
updates, the timing of receipt must be much more carefully considered than in the case of direct mail which drops
through the letter box once a day.
According to the research, text messages become unpopular once they extend outside the working day and into consumers'
leisure hours. On average consumers were 8% less responsive after 5pm. Over 393 complaints regarding SMS advertisements
were made to the Advertising Standards Agency in 2003, an increase of 500% over 2002.
"I kept getting the same message, twice a day, three days running. It was really annoying" Mrs Y, 35-44, Yorkshire
Appropriate to the brand The research also uncovered a link between marketing campaign success and the association of
the brand with the chosen marketing channel. For example, brands most closely identified with online activities, such as
Amazon.com and Lastminute.com, were far more successful in communicating via email and text message than traditional
retailers: text messages from online brands were 13% better received than traditional retail brands. This was especially
pronounced for brands selling simple consumer goods such as CDs or flights. Outbound marketing for flights by online
travel brands proved twice as popular as that carried out by high street travel agencies.
"Following an email from Amazon, I bought a book they recommended. I was impressed by how well they judged my taste." Mr
Z, 35-44, Motherwell
Protecting New Zild Spam via text-messaging is, thankfully, not currently a problem in New Zealand, despite the
all-pervasive adoption of the medium by our younger consumers. We just need to convince our mobile providers not to
succumb to desperate pressure from marketers unable to find effective means of communicating with the 15-24s through
traditional media.
Regional Press Online Seven of APN's regional New Zealand newspapers - from Whangarei to Christchurch - launched
websites this morning, promising to deliver daily updates of local news and sport.
Three of the newspapers - the Northern Advocate , the Daily Post and the Wanganui Chronicle - are presenting their news online for the first time. The other four papers (Hawkes Bay Today , the Christchurch Star , Bay of Plenty Times and the Wairarapa Times-Age ) have upgraded existing websites.
APN (publishers of the NZ Herald, y'know) are moving away from the centralised Fairfax model (where newspapers pool
their news at stuff.co.nz.) and towards local content centres. Six of the seven papers are using the same basic
template, and, in the first phase carrying only local news, local sport and a once-over-lightly guide to the attractions
in their local region. Not exactly state of the art, but it's a start.
The lone holdout from the standard template? The Wairarapa Times-Age, which already offers a more comprehensive range of
editorial and supporting information.
The surprising omission from this first step: online classifieds. Given that classifieds are where the money is, and
where the online competition is fiercest, we'd have thought that APN would post those online first, even before local
editorial. Guess they aren't quite as crassly commercial as us ...
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ENDS