Ones to Watch

CMO50 2022 One to Watch: Michael Nearhos

  • Name Michael Nearhos
  • Title Executive director, marketing
  • Company Foxtel
  • Commenced role September 2021
  • Reporting Line Chief customer, marketing and revenue officer
  • Member of the Executive Team No
  • Marketing Function 160 staff, 7 direct reports
  • Industry Sector Media and entertainment
  • 2021 ranking New to CMO50
  • Related

    Brand Post

    “Take risks and don’t be afraid to have a contrary point of view” is a mantra for Foxtel’s executive director of marketing, Michael Nearhos.

    “The work and outcomes – and team engagement - will be better for it.  I write it into our briefs: ‘let’s disrupt ourselves, again’,” he tells CMO.

    So that’s exactly what Nearhos did when he embarked on the quest to change opinions of Foxtel from dinosaur to a modern streaming provider through ‘Old dog, new tricks’, the first of brand reappraisal campaign launched in 2021. It proved a golden marketing moment for this marketing chief.

    “It was a massive departure from the past. We faced head-on the perception Foxtel was a dinosaur and flipped it – with the help of Sam Neill,” Nearhos says. “The new self-awareness and tone saw a massive lift in brand health and outcomes. Audiences were much more open to the news about how much the experience had been transformed, while driving positive nostalgia.”

    Innovative marketing

    There’s no doubt Foxtel was facing intense competition in mid-2021 from global and local streaming players vying for audiences. Pandemic and economic factors were also driving uncertainty. With the Foxtel main brand producing 70 per cent of Group revenue, something had to be done to rapidly improve its brand health, slow churn and continue to drive sales.

    “While pay TV is on a gradual decline, it is critical for Foxtel to maintain that audience base, and its higher ARPU, to fund our transformation,” Nearhos comments. “We had successfully evolved to grow new audiences through new streaming products: Kayo, Binge and Flash. Foxtel needed to recapture its challenger spirit.”

    The solution was to position Foxtel as the content aggregator of choice, demonstrating its unparalleled range of live and on-demand shows, local and global, served up both under the Foxtel moniker as well as third-party brands available on its platform, such as Netflix, Prime Video and Disney+.

    “Foxtel needed to capitalise on the consumer opportunity to drive content and experience. Being expensive, Foxtel also needed to reaffirm its value for money and premium positioning,” Nearhos says.

    The ‘Old dog, new tricks’ creative brief was about challenging perceptions and getting Australians to re-see Foxtel as relevant, approachable and innovative, offering a simpler entertainment solution to bring all their content into one place. It was concepted and produced entirely by the in-house Fox Creative team.

    “Our campaign series addresses head on the perception that we are a dinosaur and flips it,” Nearhos says. “It demonstrates our proof points rather than just states them, and grounds them in humour and what we are passionate about: Content.”

    The team engaged iconic local actor, Sam Neill, to align with Foxtel’s new tone while leveraging his role in the new Foxtel Original Series, The Twelve, as well as the latest Jurassic Park film.

    Nearhos and the marketing team worked with product and tech teams to define key proof points the brand and comms would need to leverage. These included having the ‘best content’ through Fox Sports, Foxtel Originals, HBO and BBC, as well as Foxtel’s credentials as the best-in-market aggregator of third-party apps. There is also a new-look and more intuitive UI available, with voice-activated search and discovery through the TV remote, plus its picture quality (4k Ultra HD).

    From a customer care perspective, several gifting offers launched, such as adding drama channels for 10 months to all packs for free, providing 350,000 complimentary voice remotes to customers, and upgrading most boxes from HD to UHD. In addition, Foxtel Rewards, the group’s loyalty program, was relaunched with new offers such as Live Nation rewards and Hoyts ‘mate’s rates’.

    The work is had a significant impact to date. Against the KPI of customer intention to stay, Foxtel saw a 66 per cent improvement on benchmarks, while non-customer consideration improved 33 per cent compared to benchmarks. A third KPI, ‘taking action off the back of the campaign’, also saw an 81 per cent improvement on benchmarks. In addition, trust improved by 11 points year-on-year and all media targets were achieved.

    Business smarts

    Behind the scenes, a major transformation program was initiated and underway. This included work by HR to develop Foxtel’s new employee value proposition.

    “The key objectives were and remain cultural renewal, significant improvement in collaboration, greater efficiencies and more commercial, value-based decisioning, while improving the customer experience,” Nearhos continues. “I have doubled down on these objectives with the marketing team.”

    An example he points to is the in-house Fox Creative team, whose headcount reduced by 50 per cent in FY21 and was cut further last year. Morale was significantly impacted as a result.

    “Within six months, through deliberate change management and engagement, new processes and re-igniting the team’s passion for entertainment, and to entertain, team engagement grew to a very high 64 per cent,” Nearhos says.

    Supporting this is work to CEO engagement and ambassadorship for the Foxtel brand’s new tone. “New brand work is being championed as an emblem of ‘renaissance’ and cultural renewal,” he adds.

    There’s also a wealth of programs to win the “heads and hearts” of employees, Nearhos says. Examples include bi-monthly engagement activities, team huddles and recognition, a Marketing Capability Framework, learning programs and more.

    Data-driven maturity

    More tactical work has been afoot at Foxtel too. Having won back broadcast rights to cricket in 2018, Foxtel’s audience was well established. Yet it needed to win more audience share against fierce competitors, Channel Nine and Seven. So Nearhos and his team turned to data to find a way forward.

    The marketing strategy saw Foxtel position 4K Ultra HD plus its commentary team as key reasons to tune in in order to lift digital fan-based engagement. Key insights driving the campaign included the knowledge Foxtel’s channel talent drives product Net Promoter Score (NPS) and likability, plus the fact only 39 per cent of customers with 4K compatible set-up access are watching in 4K Ultra HD. This is despite sport being the second-highest ranked genre after movies in terms of importance of UHD.

    Research further shows an emotional connection to content is what drives desire to engage in 4K Ultra HD.

    “Our campaign creative and media buy reinforced simple campaign messaging to our current customers driving viewership on platform, while prioritising our product USP to the base ‘Watch the Ashes in 4K Ultra HD. Only on Foxtel’,” Nearhos explains.

    The cricket season kicked off with an innovative ‘Mount Rushmore’ stunt on Sydney’s Bondi Beach featuring the faces of Foxtel’s world-class cricket commentators including Shane Warne, Isa Guha and Adam Gilchrist. Campaigns also encouraged customers to sign up and engage with Foxtel Rewards helped to reduce product churn.

    An online Cricket Hub then gave customers an ability to engage with unique content and promotions. A ‘watch & win’ promotion was driven by a codeword each day of the test match via the campaign landing page, enabling scores of customers to win tickets.

    Results included a +10 per cent uplift in viewership, the highest audience ever for Foxtel cricket. In terms of customer engagement, there were 2.7x more entries to competitions than previously, 28 per cent of which were members engaging for the first time. One in four participants watched 25 per cent test cricket on average. And notably, the campaign drove Foxtel premium sales.

    Commercial acumen

    Even as the work has progressed, Nearhos has been working to ensure his team can respond while also staying motivated. When he took over the executive director of marketing’s reins, capacity was running at 120 per cent + across the teams.

    “Change had to happen,” Nearhos says. “How we manage workload sustainably is critical for our people, our teams and the company. Our ways of working and efficiencies needed to be more appropriate for a streaming-era business.

    “Plus we work in entertainment and our people have a passion for it. We want enjoyment and fun to be part of the marketing and creative team DNA.”

    Foxtel’s newly embraced ‘Ways of working’ goals are: Enable better cross-functional coordination and planning, unlocking the strength of the group; Reduce friction, and improve speed, agility and efficiency; increase creative capabilities and capacity to deliver; improve shared goal setting and focus on continuous improvement; and improve clarity on people’s roles, trust and employee engagement.

    Off the back of these, Foxtel’s marketing team has a new planning process, group marketing calendar and key activity map, standardised campaign types, clear delivery processes, and a two-speed creative and marketing structure to work in.

    A number of new tools have also been on-boarded, including the ClickUp suite to manage all Foxtel and Streamotion marketing campaign and project activities. Airtable is a database being used for hybrid collaboration, and an investment is being made into digital asset management.

    For Nearhos, the work has provided change support, leader ownership, change measurement and flexibility.

    Commercial acumen

    And the results? Foxtel revenues have turned around for the first time in five years. Nearhos highlights the News Corp’s FY22 Investor Briefing in August 2022, where CEO, Robert Thompson, said: “At Subscription Video Services, the Foxtel Group’s renaissance continued, with adjusted revenues, which excludes currency impact, rising 4 per cent in the fourth quarter, while Adjusted Segment EBITDA rose 32 percent in the fourth quarter. And importantly, excluding currency, full year revenues for the segment, rose for the first time in five years.”

    “Marketing has been a major driver of turnaround success. Media mix modelling shows paid media alone contributes 16 per cent of retention outcomes,” Nearhos says. As at 30 June 2022, group subscriptions were up 13 per cent year-on-year, and FY22 group revenue was up 8 per cent.

    Customer intention to stay was another notable result, with the highest score of 85 per cent recorded since December 2020. Sales for H2 FY22 were +123 per cent of target.

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