Christmas has arrived early at Sky Television with the announcement of a
pounds 1m promotion, designed to be an early celebration of the five
millionth Sky customer, who should have signed up before the end of the
The promotion, which BSkyB marketing director Philip Ley claims to be
the biggest of its kind by a UK TV company, is a culmination of Sky’s
rejection of generic TV ads in favour of strategic below-the-line
activity targeting new and lapsed subscribers.
With the company’s declared intention last autumn to concentrate on
event-based advertising has come a renewed dependency on targeted
mailshots, sales promotions and affinity programmes designed to appeal
to distinct audiences and reinforce loyalty.
ITV rules prevent Sky running event-led TV campaigns and the company has
not used TV since signing with Duckworth Finn Grubb Waters this autumn.
Instead, above-the-line activity has been concentrating on press and
radio campaigns to support the current promotion and new channel
launches in November.
For a television company which has seen the quality of its programmes
improve dramatically over the last couple of years, Sky TV is facing up
to the challenge of letting consumers know about its service without
The below-the-line spend has been increased accordingly. Last week, Sky
added a new agency WAVV Rapp Collins to its below-the-line rota, where
it joins Touch and LBM.
‘We are spending more on subscription marketing than ever before,’ says
customer marketing director, David Thatcher. ‘We needed extra hands.’
Event-led mailing is also increasing. WAVV Rapp Collins’ first campaign
invited customers to experience the 100 Greatest Movies season and to
benefit from one month’s free subscription.
The campaign, targeting one million people, broke on 27 November and
will be followed by another push, details of which are under wraps,
Meanwhile, the company is testing direct mailing of video highlights of
forthcoming programmes to ex-subscribers.
If the test proves to be successful, and Thatcher is very confident that
it will, Sky will expand the direct mailing of video highlights next
For the first time, Sky is confident enough in its programming to
introduce sampling. Investment in programming and the development of new
channel packages have paid off and the company now has some quality
programmes on offer. All it now needs to do is to tell lapsed
‘As the size of the viewing base grows, it becomes more and more
important to reduce the size of churn in order to maintain the rapid
growth of the last few years,’ says Thatcher.
The company has struggled to reduce churn, the drop-out rate of
Looking at current figures, BSkyB seems to be winning the battle. The
company admits the churn rate stood at 30.3% in the year ending June
1992. For the year ending June 1995, the figure is 12.7%. A dramatic
reduction, although this still translates into around 580,000 lost
subscribers a year.
Subscriptions currently contribute 84% of BSkyB’s revenue, 74% from
direct-to-home (DTH) and 11% from cable. DTH subscription revenue rose
by 35% and cable by 56% year on year in the three months ending 30
However, with advertising sales currently only contributing 10% of total
revenue, the pressure is still on to maintain subscription growth.
‘Subscription management is very important. It contributes such a large
percentage of our revenue,’ says Thatcher.
In the past, BSkyB has suggested 10% might be an acceptable churn rate.
Following the success of affinity programmes in the retail sector, Sky
has put considerable effort into developing links with a variety of
Currently, subscribers benefit from 15-20% reduction on selected BT
calls, the Sky Travel Service, the Sky visa card (with no annual fee),
Guardian Direct insurance (£25 cash back), low-interest loans through
Lombard Bank, cheaper membership of the AA and, launched this November,
free crossings with Sally Ferries and free CDs through Firecrest.
Details of all affinity programmes are contained in Sky Plus in Sky’s
customer magazine, Sky TV Guide.
Ironically, at least one mass media player, BSkyB, is finding that one
of the most effective ways of reaching, and keeping, their audience is
via the direct route.