GRADINGER HELPS CHART PAC BELL'S NEW COURSE TELECOM VETERAN HELPS CALIFORNIA CARRIER MANEUVER THROUGH WAKE OF BIG THREE

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Elizabeth gradinger, an avid sailor and head of all marketing efforts at Pacific Bell, has decided on a course for beating the telecommunications giants.

"When you sail in a race, the big boats start first," leaving the smaller ones stuck with figuring a way to get out of their turbulent wake, said Ms. Gradinger, just appointed to the new post of VP-Pacific Bell shared services marketing communications. "You must find a way to tack out of their bad air or you'll never be able even to correct your course, let alone win."

AGAINST THE BIG 3

For Pac Bell, the bad air consists of the massive media blitzes, and cutthroat competition, that tele-communications' Big 3-AT&T Corp., MCI Communications Corp. and Sprint Corp.-have leveled across California as part of their battle to win long-distance, and then intrastate, phone business.

The next big bellow will arrive in the coming year as the telecom giants are allowed to compete for basic local phone service, and as Pac Bell is allowed to compete for long distance. Ms. Gradinger arrived at Pac Bell in March, after a decade at Sprint.

"It doesn't have to be a media war for us," Ms. Gradinger said, noting that Pac Bell has deep roots in California communities, especially through its large work force.

And the goal of advertising has to be emphasizing those local ties while not letting the big, out-of-state guys steal that imagery.

Pac Bell has had trouble getting consumers to distinguish between its advertising and rivals' efforts that use pictures of the Golden Gate Bridge and Los Angeles scenes. The marketer has responded with a quirky TV campaign from Goodby, Silverstein & Partners, San Francisco, which handles its branding efforts.

The humorous commercials feature a "Pac Bell spokesperson" who gets pulled away in a police car for blocking traffic and urging commuters to work at home, or who checks on a dial tone and winds up helping a mother make beds and trim hedges.

The campaign is a departure from stereotypical phone advertising, so it "creates strong feelings both positive and negative," Ms. Gradinger said.

UNCOMFORTABLE FEELING

The commercials break through in terms of Pac Bell recognition among consumers, but have "people both internally and externally feeling very uncomfortable," she said.

Some marketing executives in the industry believe all telecom marketers would be happier with the old-style, AT&T-type advertising.

Instead of charting new waters in their marketing, the companies would rather rely on "pictures of guys climbing poles and working in the rain, grandpa getting a call from the kids," said one marketing expert inside the telecom wars.

The fiercer telecom environment also has created uncertainty for agencies. Pac Bell, with annual ad spending approaching $60 million, is renegotiating compensation contracts with all its 44 agencies and simultaneously trying to trim that roster. Other shops include Ketchum Advertising, San Francisco, for long distance; and Ogilvy & Mather Worldwide, Los Angeles, which handles direct. Goodby is likely to receive the assignment for a new TV service Pac Bell will launch next year to compete with cable.

Apparently heading off the roster is Foote, Cone & Belding, San Francisco, which handles Pac Bell's Yellow Pages account, but even that isn't definite. Pac Bell plans to dump FCB, since sister agency FCB/Leber Katz Partners, New York, handles AT&T Corp. But Pac Bell just broke new FCB-created advertising, and Ms. Gradinger, who's pleased with the creative, may stick with FCB for the length of that campaign, which could be a couple of years.

"One of the goals is to determine who are the really powerful [agency] partners and use them exclusively," Ms. Gradinger said.

BUILDING TEAM SPIRIT

One of her first endeavors at Pac Bell was to bring the key agency players together for a three-day "Winning Spirit Workshop," where representatives of eight to 10 agencies built team spirit.

"The team is better than the sum of its parts," Ms. Gradinger said.

To avoid a costly media war, Ms. Gradinger will move Pac Bell in the direction of event sponsorships, concentrate on ethnic markets, and experiment with new marketing concepts such as the carrier's sponsorship of the new Pacific Bell Park for Major League Baseball's San Francisco Giants.

Despite the company's comfortable place in the community, Pac Bell itself is changing as a result of its acquisition by SBC Communications.

"All the regional Bell companies are facing the same kind of challenge," said Jeffrey Kagan, president of Kagan Telecom Associates. "It's not going to be a cakewalk. The one who wins the race will be the one who markets best."

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