Microsoft Slates MSN-TV Holiday Campaign

Redmond, Wash.— Looking to find an audience for its MSN-TV terminal, Microsoft is going after older Americans with a comprehensive multimedia advertising campaign for the holidays.

Sam Klepper, MSN-TV senior marketing director, said the holiday campaign will revolve around three direct-response television commercials (each in 60-second and two-minute versions), and will also include direct mail, print and radio spots.

The print effort will include advertising in American Association of Retired Persons (AARP) publications, while radio spots will run on Golden Oldies and similar programs that cater to older audiences. In addition, Klepper said MSN-TV will run spots on more general programming to attract a younger audience that might be interested in giving the Web terminals to their parents or grandparents as holiday gifts.

For the first time, MSN-TV has created a Web site that will enable MSN-TV gift purchasers the ability to give a subscription to the service as a gift as well. The site, www.MSNTV.com/gift, launched Nov. 1 and enables shoppers to purchase "a gift certificate" to an MSN-TV subscription. This involves the use of a code that a user can enter at registration to receive the amount of the subscription that was purchased for them.

Subscription fees currently range from $9.95 per month for the basic economy plan with five hours per month (additional hours can be purchased later) to $21.95 per month for unlimited service. The RCA MSN-TV terminal, which includes a wireless keyboard, carries a $99 average street price.

"We've learned that the $9.95 per month is an attractive option, but when it comes to actually signing up, many people don't want to be restricted and have to watch their hours, so they decide to go for the unlimited package," Klepper said.

As a result of the intensive effort, Klepper said MSN-TV expects to double its sales for the month of November. The company would not reveal subscriber counts.

The 55-plus age group represents "the largest segment that is not online today in the U.S," Klepper said. At the same time, it is the fastest growing segment of new users that is going on to the Internet.

"We looked at the installed base [of WebTV/MSN-TV terminals] and realized they represented a significant portion of the senior population, and that they have lower churn and higher satisfaction than other groups," said Klepper.

Klepper said MSN-TV is perfectly suited to address most of the obstacles older Americans say they face in using the Internet.

Those obstacles typically include concerns about the high cost of buying, and the complexity of using a computer. The MSN-TV terminal was designed for easy hook-up to and use with a conventional television set.

Through the direct response commercials, MSN-TV is making the service available both on a direct basis and through traditional retail distribution, Klepper said.

He added that Best Buy and Circuit City "are our main sources of new customers," following a major consolidation of retail outlets.

"We've focused around retailers specifically that meet some of our criteria," he said.

Over the last year, MSN-TV has "reduced the number of retail floors carrying the product in order to get retailers that have national coverage, high sales per store, and that cater to our target and demonstrate low churn," he said.

Klepper said that to control churn MSN-TV found it was critical to have sales assistance — such as that offered by Best Buy or Circuit City — to properly qualify the sale.

Similarly, sales assistants qualify people who purchase the product through MSN-TV's direct sales hotline.

The applications cited most by MSN-TV users are e-mail and instant messaging to help older Americans stay in touch with family and friends. Web browsing follows that.

Microsoft has "moved away" from the former push to encourage younger audiences to use the terminal to view television programs interactively, Klepper said.

"It became clear that MSN-TV was all about affordable, easy Internet and e-mail," he said. "The TV features were hard to describe in a compelling way to consumers and the usage wasn't that easy."

Asked if the changing demographic strategy would impact plans for consolidating MSN-TV services in future platforms, such as Microsoft's Xbox, Klepper said he could not comment on future plans for MSN-TV, adding that today's strategy may change again as new trends and capabilities emerge.