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AT&T considers crucial issues as telecomm and computers converge

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"To be a success, a business-to-business marketer needs to be more long-term in its position and stay focused on that." Marketing "really is king" when it comes to AT&T Corp., perennially the nation's top business-to-business advertiser. The telecommunications giant was No. 1 in 1996 b-to-b spending with $245 million, according to Business Marketing's annual ranking. AT&T outspent No. 2 IBM Corp. by more than $11 million, putting about three of every four b-to-b dollars into TV.

"Essentially, we're a single-brand company," says Jim Speros, 43, VP-advertising and marketing communications for AT&T's business markets. "We're beginning to use a more cohesive approach, one with the overriding theme that AT&T is the enabler of business success."

In the coming months, AT&T plans to take a more integrated thematic approach in its b-to-b advertising to drive home the point that it has solutions for any business telecommunications challenge.

In print and TV advertising created by McCann-Erickson Worldwide, New York, that broke in May, the company focuses on different products of AT&T's business solutions, from wireless technology to Web site management.

For example, three TV spots, using voiceovers by actor George Clooney, emphasize ways that AT&T can help transform the way companies currently conduct operations to grow their businesses.

However, industry executives question whether AT&T will have to soft-pedal its "business enabling" approach.

"We've done work with telecommunications companies in which they tell businesses that they can help them with their business. And people turn around and say, `You're a telephone company, how can you help us? I already have problems with you as a telephone company,' " says Mr. Kane, president of Kane, Bortree & Associates, a New York new-products and brand/image consultancy that counts AT&T among its clients. "It's potentially overreaching and overpromising and it can be alienating if someone has had problems with telecommunications previously."

However, Mr. Speros, with AT&T for 18 years, adheres to the marketing precepts of focus, consistency, continuity and sufficiency of spending.

"Once you pick a position, it's important to stay the course and not move off of it," Mr. Speros says. "All too often, marketers will stay with a position for too short a time. To be a success, a business-to-business marketer needs to be more long-term in its position and stay focused on that."

Spending off from '95

AT&T's 1996 b-to-b spending was off 5% from '95, but that can be laid largely to the spinoff of two divisions, Lucent Technologies (which made its Top 100 debut at No. 12 with nearly $62 million in '96 advertising) and NCR Corp.

It also has made efforts to more precisely target its media. Mr. Speros says if spending for those divisions were factored out, "Our spending in '96 is actually up about that same [5%] amount."

For b-to-b markets, the company prefers a mix of media, ranging from trade publications to traditional business journals, such as Fortune, Forbes and The Wall Street Journal. Network TV is used to create broad awareness, while cable is increasingly used for more targeted reach.

The Internet, of course, is growing in importance as a channel to provide information to business customers as well as access to consumers, Mr. Speros says.

"More and more business customers expect to receive information via the Internet," he says. "As a market leader in communications, it's important for us to use the tools our customers are using to reach our own customers. This is an important channel to reach business customers, to provide both information and for customer care as well."

AT&T's Internet ad spending is included in the budget for electronic media, Mr. Speros says.

Convergence spurs competition

"We're seeing a convergence of computers, telecommunications and communications in general, in that we have to spend more broadly to reach a broader audience since that's what our competition is doing," he says.

"Where once we had traditional competitors in telecommunications, we now have competition from a broader array of companies, such as Microsoft, IBM and other Silicon Valley companies. This means we have to spend more across more business categories just to stay on top of things," Mr. Speros says

For instance, there once were no magazines to reach Internet and World Wide Web users. Now there are a plethora of magazines and TV programming about just that topic.

"As those media outlets open up, there's a vacuum to fill and those outlets get filled with more business-to-business advertising," Mr. Speros says.

But Mr. Speros does not anticipate a tremendous shift in how people use media.

"I believe electronic media, like the Internet, and print media, like magazines, are complementary. People still have a desire to pick up and hold publications, clip articles and pass them around. The Internet is more than simply providing vast amounts of information; it's evolving to become more of a customer service tool as well," he says.

With the economy doing well, AT&T is seeing growth from all business segments, particularly small business and from Internet traffic. Call volume is up; AT&T says the company is handling more than 230 million calls a day over its long-distance network, much of that coming from new business start-ups, cottage industries and the growing work-at-home market.

Branding fights obsolescence

"We estimate 85% to 90% of our [new] business today is coming from small business, from more and more people demanding phones, fax, wireless, Internet," says Mr. Speros.

"As small-businesspeople go out into the field, the whole concept of wireless becomes an important issue. That's when we roll out demonstrations of the entire arsenal of communications tools that AT&T can provide."

Mr. Speros sees the need to continually reinforce brand as a primary marketing weapon since technology gains can be leapfrogged within six months.

"You have to establish the brand and brand strength very clearly. There's a movement back toward brands as a primary criteria for making decisions and a lot of marketing communications will move back to reinforce brand equity."

Mr. Speros says he believes AT&T has a strong advantage in the brand game, citing research that shows 97% of the market is aware of the AT&T brand and its core attributes, such as customer service, reliability and trust.

"These are strong selling points when it comes to doing business, particularly with the large [customer] end of the market, where they cannot afford to have networks go down while transmitting mission-critical information," he says.

"We're proud of the fact that 99.98% of our calls go through on the first try. Reliability is a critical attribute and AT&T owns that in the marketplace."

Internet security player

AT&T also hopes to be a major player in Internet security.

The company in October 1996 introduced AT&T Secure Buy, which offers businesses a safe way to conduct their commerce electronically

New products such as these "make the whole concept of business success come to life for customers, whether it's data transport or greater Web security," says Mr. Speros.

"Undoubtedly, AT&T will bring out new things in the area of Web hosting, Web security, data transport, data transmissions," since these are issues of prime importance for AT&T customers, he says.

Marketing takes the throne

Whether it's providing Internet services or basic telephone connections, Mr. Speros emphasizes that marketing "really is king" and demonstrating an understanding of customer needs is critical. "We're in an era where telecommunications is transforming the way that people communicate with each other," he says. "With that in mind, it's important never, ever, to underestimate the power of communications."

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