Virgin Media Speedtest: 50mbit only 2 percent more revenue.

As you know I've been arguing for simplifying the broadband offers to the French model of 1 price that gives the highest speed to all customers. My argument being this simplifies the marketing and the back office.

Chris Marsden spotted the Virgin Media broadband subscription numbers and notices that only 3% take the 50mbps subscription. Only 90,000 subscribers are willing to pay 10 pounds a month extra for the top of the line. Only 9 percent of customers take the 20Mbps version. So a grand total of 88% take the cheapest offer. The question then is, how much this brings in extra

Top of the line: 900k extra compared to the Medium and 1,350k per month compared to the simple version
Middle of the line: 3 million a month extra compared to the medium

So roughly 52 million pounds extra a year as the result of all that differentiation. All that compared to a quarterly revenue of 660 million for the cable business. A dismal 2 percent extra these customers bring in.

The biggest problem is to assess the costs side. Is it costing them more or less than 50 million to support the complexity. But I am willing to wager it is costing them in the double digit millions to support this. Just because everything they do has to keep in mind the three offers. It's not just the back office but also the print campaign. On top of it every temporary offer to tease the customer has to take this into account. It's a proper hassle.

So if this was a speedtest, would you really be racing for the 50Mbit offer to differentiate your product?

But of course I will promote Virgin Broadband for free on my blog.

It seems like Virgin UK broadband's ad agency spammed the blogosphere with its new ad and asked for feedback on it. Where feedback means; "could you please post it on your blog and be nice about it". James Enck already put a review up: "Cute, but pointless, and it does nothing to convey the sort of message this company should be telling regarding its competitive strengths." I can only say that I am glad that I got an e-mail explaining the ad, as otherwise I would never have known that:

We’ve recently been working on a new video to promote Virgin’s 50Mb broadband service, following on with the ‘Powerful Stuff’ idea. For the video, we’ve recreated the famous ‘When Harry Met Sally’ diner orgasm scene, but with a slight twist!

The video was shot with all the men in the diner thinking they were just extras in an advert. The reactions are genuine, which hopefully gives it a funny edge.

Unfortunately for Virgin I don't like When Harry met Sally, it makes me cringe everytime it is on TV. This ad, though more original than UPC's ad for Fiber Power makes me want to switch away as quickly as possible. Imagine this coming on tv, when you're on the phone with a friend. Nope, if they want funny, they should go to Hong Kong and see how real fiber is promoted.

Virgin's ad agency should have a look at what KPN does with its commercials. The current series of Generation KPN are quite good in promoting KPN.

WARNING: Virgin's ad is Not Safe For Work (with audio on)