NEWS ANALYSIS: Virgin Media 'bundles' in for a fight

Created from NTL Telewest and Virgin Mobile, Virgin Media - launched last week - has a complex 'quadplay' offering to explain. Alex Black asks if customers can be seduced by Sir Richard Branson's latest brand.

Virgin Media launched last week to become the first UK service provider to offer consumers ‘quadplay’ – TV, broadband internet and home and mobile phone lines for a single monthly fee.

To providers of any of the above services, the company is the new kid on the block – but one backed by serious marketing spend and the awesome power of the Virgin brand.

But it is not a new entity – the company is the result of the marriage between NTL Telewest and Virgin Mobile.

‘Virgin Media was formed by mer­gers, and knotting these companies together has been a challenge,’ says The Daily Telegraph comms editor Dominic White. ‘The brand alone is not enough and Branson knows that.’

Troubled past
It is no secret there is ‘history’ with cable. To many, Virgin Media will – for a while at least – be seen as little more than a rebranded NTL Telewest.

The scars of NTL’s well-documented customer service woes are healing, but are still raw. The notorious NTHell site (nthellworld.co.uk) – set up for furious customers to vent their spleen and swap horror stories – still exists, as does the similar ntl.hell.co.uk. It would take very little for them to turn on their nemesis’s reincarnation.

‘If things go wrong there will be a finite amount of time before customer loyalty to the Virgin brand wears thin,’ cautions White.

Unsurprisingly, Virgin Media – whose marketing campaign has taken a somewhat racy theme and carries the slogan ‘Not just a little bit, all of it’ – is determined to banish memories of poor customer service.

It is using Leeds-based agency Ptarmigan on a regional brief to try and generate positive coverage around Virgin Media’s call centres. Its message is that the situation has been turned around thanks to significant investment and a focus on caring for the customer, says Ptarmigan associate director Cat Webster.

Leaving customer service aside, what other challenges confront Branson’s latest foray?

‘The jury is still out on whether or not consumers actually want multiple services from one provider,’ says Carrie Pausey, senior analyst with research outfit Ovum. And explaining ‘bundling’ to the consumer is no easy task.

Anthony Moore heads Consolida­ted Communications’ digital lifestyle division Connect, and led the agency’s NTL Telewest team until last year (PRWeek, 27 October 2006).

‘The old NTL Telewest bundle was complicated enough – and that was without a mobile element,’ says Moore.

‘People now have to be persuaded to pay up to £120 a month.’

Moore points out that explaining ‘bundling’ presents a media-relations challenge for Virgin Media’s battery of PR advisers (see below). He says: ‘The complexity of these bundles often means the media are reticent to do direct cost comparisons with single service providers.’

Pausey adds that, generally, consumers’ pre-existing mobile, internet, TV and landline contracts would need to expire as simultaneously as possible for ‘bundling’ to be most beneficial – something that is also difficult to communicate.

Customers are nonetheless becoming more savvy, though, argues BT chief press officer Giles Deards. He says: ‘A few years ago the internet was something that lived in the box-room of your house. Now you need to offer the customer other services alongside broadband. It is no longer a case of supplying a “dumb pipe” to people’s homes.’

T strives to push the value of its internet TV and telecoms services – offering people ‘more than Freeview, but without a monthly subscription’.

It is a similar strategy to that of Tiscali TV.

‘We are the middle ground between Freeview and the “full-fat” offerings of Sky and Virgin Media,’ says Tiscali head of PR Nick Southall. ‘Not everyone is ready to pay huge monthly subscriptions.’

BSkyB the major threat
Virgin Media’s major rival is, of course, Sky, and media coverage since the former’s high-profile launch last week has inevitably focused on the locking of horns between Branson and BSkyB chief executive James Murdoch.

Virgin Media chairman Jim Mooney has been particularly vocal in his criticism of Sky, and there is a sense that the battle between the two companies could get ugly.

Can Virgin Media really wrest customers away from Sky? Not according to Goran Nastic, editor of Cable & Satellite International, who says: ‘I don’t see any real differentiator between what Virgin Media is doing and its competitors.

The mobile element is nice, but it remains to be seen how this will play out. I doubt Murdoch will be quaking in his boots just yet.’

Sky is certainly bullish about its prospects and has battled successfully through several previous potential challenges to its supremacy. For example the launch of Freeview in 2002 led some analysts to speculate whether Sky subscriber numbers would fall (they did not).

The crucial PR challenge for both Murdoch and Branson will be explaining how their ‘bundle’ offers the best value and service quality.

Despite the inevitable breast-beating and attention attracted by Virgin Med­ia’s launch, there is a long road to travel yet before judgement can be made on the wisdom of Branson’s latest gamble.

Virgin Media: who’s fighting the new brand’s corner

James KYDD MD of marketing; Paul RICHMOND Director, corporate affairs and media; John MOORWOOD Head of consumer media relations; Simon DORNAN Head of consumer PR; Jo BAKER Head of media relations; Alexandra LEGG Brand PR manager; Kirstine COX Head of corporate media relations; Liz NICHOLSON Corporate PR manager.

Agencies

Corporate and financial:
M: Communications The team is currently led by senior consultants Lisa Gordon and Nick Fox.

Consumer:
Henry’s House
The team is led by associate director Penny Brignell, plus account director Charlotte Speedy and account manager Vinnie Balasubramaniam.

Regional:
Ptarmigan
An eight- strong Leeds-based team led by associate director Cat Webster.

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