Time Warner Cable 2007 Annual Report Download - page 13

carrier and wholesale customers. TWC’s virtual private network, or VPN, services enable customers to use IP-based
business applications for secure communications among geographically dispersed locations, while also providing
high-speed access to the Internet, and provide secure access for remote users, such as traveling employees and
employees working from home or a remote location. TWC also offers a variety of Ethernet services that are
designed to provide high-speed, high-capacity connections between customers’ local area networks, or LANs,
within and between metropolitan areas.
Advertising
TWC sells advertising time to a variety of national, regional and local businesses. As part of the agreements
under which it acquires video programming, TWC typically receives an allocation of scheduled advertising time in
such programming, generally two or three minutes per hour, into which its systems can insert commercials, subject
to certain subject matter limitations. The clustering of TWC’s systems expands the share of viewers that TWC
reaches within a local designated market area, which helps its local advertising sales business to compete more
effectively with broadcast and other media. In addition, TWC has a strong presence in the country’s two largest
advertising market areas, New York, NY, and Los Angeles, CA.
In many locations, contiguous cable system operators have formed advertising “interconnects” to deliver
locally inserted commercials across wider geographic areas, replicating the reach of the local broadcast stations as
much as possible. TWC’s local cable news channels and VOD offerings also provide it with opportunities to
generate advertising revenue.
Advanced Advertising
TWC is exploring various means by which it could utilize its advanced services to deliver the same kind of
targeting and interactivity to television advertisers that currently is available to Internet advertisers. For example, in
several divisions, TWC provides overlays that enable digital video subscribers with a TWC-provided set-top box to
request additional information regarding certain advertised products, using the remote control, to “telescope” from
a traditional advertisement to a long-form VOD segment regarding the advertised product, to vote on a relevant
topic or to receive more specific additional information. These tools can be used to provide advertisers with
important feedback about the impact of their advertising efforts. TWC also is working with other cable operators to
develop a consistent platform for the delivery of advanced advertising.
Marketing and Sales
TWC’s marketing strategy primarily focuses on bundles of video, high-speed data and voice services,
including premium services, offered in differentiated, but easy to understand packages that also provide a
discount from the price of buying the services separately and the convenience of a single bill. Bundles are
generally marketed with entry level pricing, which provides TWC’s customer care representatives the opportunity
to offer additional services or upgraded levels of existing services that may be appealing to targeted customer
groups. As of December 31, 2007, TWC offered over a third of its customers a price lock guarantee, which allows
customers to enter into a longer-term contract with TWC at a set rate, and TWC is continuing to roll out this offer.
TWC utilizes its brand and the brand statement, The Power of You
TM
, in conjunction with a variety of integrated
marketing, promotional and sales campaigns and techniques generally on a local or regional basis. TWC’s
advertising is intended to let its diverse base of subscribers and potential subscribers know that it is a customer-
centric company committed to exceeding customers’ expectations through innovative service offerings and
customer service. This message is supported across broadcast, TWC’s own cable systems, print, radio and
other outlets including outdoor advertising, direct mail, e-mail, on-line advertising, local grassroots efforts and
non-traditional media.
TWC also employs a wide range of direct channels to reach its customers, including outbound telemarketing,
door-to-door sales and marketing in retail stores. In addition, TWC uses customer care channels and inbound call
centers to increase awareness of its service offerings. Creative promotional offers are also a key part of its strategy,
and an area in which TWC works with third parties such as consumer electronics manufacturers and cable
programmers.
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