YOU ARE AT:OpinionTME’s massive IT spending shift forges unexpected bonds (Reality Check)

TME’s massive IT spending shift forges unexpected bonds (Reality Check)

Capto Consulting sees IT and marketing coming together in new ways

Like every industry, the telecommunications, media and entertainment (TME) marketplace is seeing significant disruption. Established TME companies are under threat almost everywhere they turn, forcing the biggest players to make significant acquisitions and present new offerings to remain competitive. Companies like Amazon, Netflix, and now seemingly Facebook are challenging traditional television with streaming video services and original content. These are prime examples of the mounting pressure.

The major industry shifts forcing the transformation stem from the fact that consumers are now in the driver’s seat. Not only do they expect preferred content from a dizzying array of sources, but today companies must deliver high-quality experiences that engage varying consumer behaviors, patterns and locations.

Because TME business models have been forced to adjust to consumer demands, yet another trend has emerged: The imperative that chief marketing officers (CMOs) and chief information or technology officers (CIOs) merge their agendas to collaborate for the success of their companies. Together they are facing massive technology disruptions and tectonic customer shifts that shatter the stability of their very existence. But success is attainable for traditional TMEs willing to tackle problems by taking a combined technology-marketing approach.

CMO-CIO collaboration will take several forms and require an ongoing give-and-take for the greater good of the organization. To catalyze customer-centricity and adopt a focus on customer experience, there needs to be a corresponding shift in technology spend across the portfolio, away from traditional concentrations of spend, toward enablers of multi-dimensional customer experiences. Enablers such as capturing an in-depth understanding of the customer, leveraging actionable customer insights, providing tailored service offerings, managing customer churn and crafting positive customer interactions across touch points will fuel customer experience excellence. Large-scale changes like these must be forged, led and governed very differently than traditional technology initiatives.

Obstacles and opportunities for the CIO-CMO team
One of the most critical challenges CMOs and CIOs must combat is disruptive competition. The digitization of the industry is happening at mind-numbing velocity, imploding TME barriers to entry and introducing new competitors that can render traditional TME businesses obsolete seemingly overnight. In a recent survey from EY, 75% of 40 top telecommunications CEOs cite new competitors as their number one threat. Specifically, over-the-top players have expanded their scope and crept into the TME’s home field and are cited by 91% of TME executives as most likely to alter customer demand scenarios in the future.

CMOs and CIOS need to understand how to put customers at the nexus of their existence. Consumers can now get the same content, apps and devices from an ever-expanding universe of providers. In undifferentiated markets, customer service and personalized customer interactions ARE the product and are now THE differentiator. Telecom CEOs recognize this shift and put customer experience management as a top priority on their strategic agendas. Operationalizing it and finding the right balance in the competition for capital between service expansion, maintaining the networks and customer experience gets you the keys to the kingdom.

Critical and costly upgrades are another area of concern for CMOs and CIOs. TME firms face a wide gap between the cost to expand, upgrade and maintain technology platforms for exploding traffic, and the revenue they can generate from that traffic. The paradox is that two interdependent requirements are both mission-critical and simultaneously contradictory: capital-intensive technology platform upgrades are an essential element to customer-centricity. TMEs need to stave off further customer defection by tapping into expanding ecosystems and conglomerations that help to quickly expand capabilities to build broader offerings that meet rising customer demands.

IT-marketing collaboration in action
A large TME based company in Los Angeles took this approach recently. Facing an uptick in churn the IT team partnered with marketing to quickly combine outside and open source data with the firm’s internal information to improve their churn model. Using new partnering techniques to reduce IT delivery from months to weeks, the firm was able to keep potential churners, but equally important, reduce false positives and only provide retention incentives to those subscribers who were truly at risk.

Where the growth is for TMEs
One area the TME CIO-CMO team should be exploring is advertising, which presents a promising revenue source. Large investments to quickly expand capabilities into cross-channel advertising reflect the intense race for competitiveness across cable companies, OTT competitors, content providers, subscription video on-demand (SVOD) providers and others.

Consider Verizon’s recent $4.5 billion Yahoo acquisition after also acquiring AOL in 2015 for $4.8 billion. The advertising opportunity stems from the need for targeted, data-driven, value-based digital advertising across multiple channels. TMEs must enter this space to catalyze future revenue streams and sustainable competitiveness.

Addressable advertising is also a long-standing capability for digital advertising. TMEs need to apply similar principles to video to enable ads that are relevant, to the right person at the right time and on the right device(s). This will take investment in systems as well as new skill-based areas such as learning how to develop and deliver the new offering portfolio and generate incremental revenue from it.

Happy together

To facilitate the most effective level of CMO-CIO cooperation, an external resource – one with objectivity and technology marketing expertise – is often beneficial to forge agendas and define with crystal clarity what needs to be done, by whom, how and by when. Together, they can explore new frontiers such as finding and vetting the right partnership opportunities, constructing application program development initiatives, creating an advanced analytics-based portfolio of offerings, building a suite of digital solutions and doing all of this with secure, protected, reliable, high-quality networks.

ABOUT AUTHOR

Reality Check
Reality Checkhttps://www.rcrwireless.com
Subject to editorial review and copy edit, RCR Wireless News accepts bylined thought leadership articles, up to 1000 words, from industry executives. Submitted articles become property of RCR Wireless News. Submit articles to [email protected] with "Reality Check" in subject line.

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