AGENCY DIVERSITY A KEY PART OF AT&T'S DIRECT MARKETING: UNUSUAL METHOD IN A WORLD MARKED BY CONSOLIDATION

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When at&t Corp. reaches out to touch the lives of its customers, it does so in a consistent manner despite relationships with several direct marketing agencies.

Yet the company, with an annual direct marketing budget of about $300 million, actually has multiple voices chiming in on its direct marketing efforts. AT&T divides responsibility for its direct marketing communications programs between Bronner Slosberg Humphrey, Boston, and Wunderman Cato Johnson, New York. Still other specialty assignments are handled by other agencies, including Foote, Cone & Belding Direct, New York (college marketing), Young & Rubicam's Bravo (Hispanic) unit; and Kang & Lee (Asian markets). In addition, it uses at least one agency to handle direct response TV advertising, Tyee Group, Portland, Ore.

"Using some smaller agencies is absolutely necessary,"says Stephen Graham, VP-Marketing communications at AT&T. "It's good to have two agencies handling the bulk of the work. There's a little friendly competition, and that pushes everyone to be more creative and more innovative."

About two-thirds of the company's direct marketing budget is handled by Bronner Slosberg Humphrey. The agency began working with AT&T in 1983, and "no two years have been the same," says CEO David Kenny.

"We've been with AT&T for 15 years, and we value, respect and expect to work with them for a long time to come."

Bronner Slosberg is primarily involved with AT&T's customer acquisition and relationship management efforts, and toward the end of 1997, picked up AT&T's business-to-business and wireless accounts from McCann-Erickson Worldwide.

The agency was put on the AT&T team to "make recommendations based on the understanding of our business and our place in the industry," says Tim Omaggio, AT&T division manager-marketing communications, who oversees the company's direct mail and fulfillment efforts. "They also have an ability to handle very complex executions and keep up with all the changes that go on in this industry so we can respond and go to market very quickly."

"AT&T is shifting toward becoming more customer-driven than product oriented, because the customer wants a suite of AT&T products," says Mr. Kenny. "People are moving from the phone to the Web to the wireless phone, and they're finding that it's nice to have it all in one place. Have one company handle e-mail, phone and all. Our role is to help AT&T manage that expanding relationship."

Wunderman Cato Johnson primarily works in specialty areas of AT&T's customer retention efforts, as well as AT&T Worldnet, AT&T Wireless and global military program offerings. AT&T views Wunderman's primary strength as the agency's ability to present out-of-the-box creative thinking.

"You couldn't think of a more challenging piece of business with all that's happening in telecom," says John Morris, Wunderman exec VP-account managing director. "It's exciting, no question about that."

Mr. Morris notes that Wunderman, which has worked on AT&T business since 1986, regularly pulls creatives and other specialists from across the Y&R operations as part of Team AT&T.

For example, a recent "World Traveler" direct mail effort is targeted to high-value customers who travel abroad. The campaign was produced in conjunction with executives at Y&R to devise an integrated general and direct marketing campaign theme.

"We pull and manage resources across agency lines as we need to to produce the best possible work," Mr. Morris says. "And when it serves the needs of AT&T, we work with AT&T's other agencies, as well."

Mr. Omaggio notes some recent agency changes are intended to help the company better reach particular target audiences.

"In multicultural areas, especially in in-language areas, we want to work with agencies that are tuned into the culture and the language," Mr. Omaggio says. "That's what Bravo and Kang & Lee do for us."

Still, other top direct marketing executives consider AT&T's division of responsibilities to be unusual in a world gone consolidation crazy.

"It comes down to the business objectives, of course, in that certain direct agencies may have better credentials in certain specific areas," notes James Hipkin, exec VP-director of customer development and customer loyalty, DraftWorldwide, Chicago, which handles direct marketing responsibilities for Sprint.

"But it starts to make less sense because after a point you begin to lose critical mass as well as the ability to absorb and react quickly to changing market conditions," Mr. Hipkin adds.

Brand marketing consultant Chet Kane, president of consultancy Kane, Bortree & Associates,agrees specialty agencies should be used to reach very specific target audiences, such as ethnic consumers, but that direct marketing programs should be handled by one agency.

"I think companies give up too much in terms of continuity," he says. "There's too great a risk that an agency will stray off target."

Executives at AT&T's direct agencies refute that contention, simply because of the time and effort AT&T puts into its own agency relationships.

"AT&T really considers their agencies their partners," says Mr. Kenny. "It's a close strategic partnership. They help us understand the market on the acquisition side; they're clear about the value of the acquisition and how much they want to spend to acquire that customer. Once they've acquired the customer, they know how to pursue that customer. It's very well defined reach for everything we do for AT&T in direct marketing.

"At the same time, they have very high expectations," Mr. Kenny continues. "They demand high quality, and they want measured success. And I'd like to think that we, as well as Wunderman, consistently deliver on that expectation."

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