Media Forum: Will Virgin Media tempt adland?

Should advertisers be getting excited by the Virgin Media launch?

For many, it was a sight they had longed to see for as long as they could remember - Richard Branson in captivity. This hardened renegade, a man who'd been at large since the counter-culture revolution of the 60s, an ageing hipster notorious for his cynical contempt for international conventions pertaining to woollen garments and facial hair.

There he was in a Perspex box in Covent Garden, surrounded by an ugly looking crowd baying for his ... But hang on. Who was this coming to visit him? The shapely and ever-so aptly named Dita Von Teese? Oh purleez. Surely this couldn't be just another shameless publicity stunt?

It surely could. Last Thursday saw the launch of Virgin Media, a 21st-century convergent media company formed out of the merger of Virgin Mobile with ntl and Telewest. Its quadruple play includes mobile and fixed telephony, plus broadband internet and digital TV - and its mission is to become the UK's pre-eminent digital media platform.

In crude terms, this means one thing - sticking it to Sky. Cable's strengths in the past have always veered towards broadband provision, and its television product has been clunky at best. When Sky decided to enter the broadband market last year, it was possible to believe that cable was losing the historical battle. After all, the Murdoch empire rarely gets this sort of thing wrong.

Astonishingly, rumblings from discontented Sky broadband customers began to surface just in time for Virgin to serve notice that it intended to up the stakes in the TV market by taking over ITV. Sky may have blocked off that initiative - for now - but Virgin says it has plenty more tricks, like new on-demand services, up its sleeve.

Sky is worried - after all, it pulled its own publicity stunt on Thursday, announcing it hopes to develop subscription services to sit alongside the Freeview free-to-air package on the digital terrestrial platform.

So, all things considered, the arrival of Virgin Media has to be exciting for advertisers, hasn't it? David Cuff, a broadcast consultant, who previously worked in the cable business as well as in advertising, certainly thinks so.

He says: "If Virgin is clever, it will talk to advertisers about the high-value digital consumers they can deliver through the Virgin gateway, and I think many advertisers will be interested in that integrated proposition. It will never be the case that there will be one clear winner - and Sky has a strongly established customer base, but I think for Virgin all the signals are good."

But Andy Bolden, the media director of GlaxoSmithKline, isn't so sure. He states: "Sky got to where it is today over a relatively long period of time, and it has achieved what it has through consistently good engagement with consumers and the excellence of the product it offers. The trick is to make things easy for the customer - and that's something you might hesitate to say the cable companies have done in the past. Virgin, of course, will be seeking to reinvigorate that. But I still think consumers will give a lot of thought as to whether or not it's an attractive proposition. It could be an uphill task."

Chris Hayward, the head of investment at ZenithOptimedia, doesn't see it that way. He explains: "Virgin Media is a reflection of what's happening across the market - media owners bringing platforms together so they can offer a spectrum of services. Everyone is doing it. You could argue that, these days, you have to offer this. Advertisers should be reassured by the quality of people involved in this at Virgin. That said, I don't think Sky will be worrying too much. You can never accuse Sky of being complacent. You can guarantee that it will respond strongly."

Absolutely, Andy Zonfrillo, the investment director of MindShare, responds. That's the crux of the matter here; you can't write off the consumer goodwill that Sky has accrued over nearly two decades. He concludes: "From a TV point of view, advertisers will want to see Virgin growing the market. Whether it can make inroads into Sky's customer base is neither here nor there from an advertising point of view. They will want to see Virgin making inroads against those who haven't switched to digital yet.

"Similarly with broadband, we'd want to see more people coming online. And we would want to know if Virgin intends to invest in new technologies that will allow advertisers to do more sorts of things. I'm not convinced that will happen in the short term."

YES - David Cuff, broadcast consultant

"Advertiser needs are changing in terms of the touch points they need to develop with the consumer. Virgin's marketing expertise is likely to help advertisers achieve cross-platform solutions and an integrated approach."

MAYBE - Andy Bolden, media director, GlaxoSmithKline

"It will be about demonstrating it can deliver. Virgin is a sexy brand name, and people are prepared to pay a lot for their entertainment, so there's lots of potential in this market. But I think it could be an uphill task."

YES - Chris Hayward, head of investment, ZenithOptimedia

"Advertisers will be interested in the (convergent) opportunities on offer. They won't want to use everything on every occasion, but they will want to explore ways of using opportunities in a structured and coherent way."

NO - Andy Zonfrillo, investment director, MindShare

"I can't see Virgin Media making a huge impact in the first year. Five years, maybe. I'm not convinced the launch of Virgin Media will make a radical difference from an advertising point of view for the foreseeable future."

- Got a view? E-mail us at campaign@haymarket.com.

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