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Time Warner Cable (TWC - Analyst Report), the second largest cable multi service operator (‘MSO’) in the U.S. is aspiring to win back some of its lost video subscribers by way of a new advertisement campaign. The new marketing effort aims to convey to its previous customers that the company’s cable service has improved over the prior year.
The Better Guarantee – the company’s new advertisement initiative is an extension of its brand image campaign, which began last year to retain existing customers, in addition to luring new ones. Time Warner cable wants to popularize the effort through broadcast, print and online media and would cost $50 million to the company.
This new ad campaign offers a 30-day money back scheme, which ensures the customers will get back their money in case of lack of improvement in their Internet service. Through this campaign, Time Warner Cable wants to challenge Verizon’s fibre optic television – FiOS TV, which hasn’t delivered the monthly savings on net bill that it promised to its customers.
In the U.S., the MSOs are facing fierce competition from telecom service providers like Verizon Communications Inc. (VZ - Analyst Report) and AT&T Inc. (T - Analyst Report), who are quickly gaining market share from these MSOs by offering fiber-based TV and other high-speed broadband services to their subscribers.
Notably, Time Warner’s arch rival Comcast Corporation (CMCSA - Analyst Report), is also facing increased competition in its video service segment has in addition started a new marketing campaign for its Internet TV Xfinity to win back its lost customers.
We expect Time Warner to benefit from this marketing effort as the advertisement highlights the area where the company has improved since last year including new smartphone applications, on-demand TV options and enhanced customer service among others.
Furthermore, the company is also investing in network infrastructure and has undertaken a massive ‘Ethernet Everywhere’ strategy. This IP-based Ethernet services over fiber will allow Time Warner to enhance its data transfer speed, which in turn will aid the company to improve its falling video subscriber base.
We currently, maintain a short-term Zacks Rank #3 (Hold) on Time Warner Cable.
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