Handset Marketers Go on Christmas Blitz

Carriers Pin Hopes on Hot-Selling Smart Phones to Buttress Q4 Sales

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SAN FRANCISCO (AdAge.com) -- Faced with shrinking consumer wallets and 90% wireless penetration, handset marketers are slugging it out for a place in consumers' holiday stockings with bigger and bolder marketing campaigns than ever.
Perfect storm? Verizon hopes so.
Perfect storm? Verizon hopes so.

The fourth quarter is a prime sales season for handsets, because it's the time period when many wireless contracts expire, freeing owners to trade to a new carrier -- and a new handset. But with the Scrooge-like economy this year, analysts are predicting people will hold on to their handsets longer.

The one bright spot is smartphones, which are predicted to defy the slowdown. Every carrier now has a flagship touch-screen smartphone, allowing it to earnestly slog it out in the 3G multimedia world against the dominant iPhone.

"I expect smartphones to make up a large percentage of overall handset sales. On the flip side, I expect overall handset sales to be lower year-over-year due to the economy," said Michael Nelson, senior VP at Stanford Group Co.

Research in Motion's BlackBerry Storm marched into Verizon stores to high anticipation and long lines, backed by an extensive promotional blitz estimated at $100 million, the largest launch in the carrier's history. Verizon spokesperson Brenda Raney called the Storm "our most significant phone this quarter."

McCann Erickson, New York, is Verizon's agency.

Unlike the original BlackBerry, the Storm is clearly positioned for the consumer and the consumer lifestyle. One spot, for example, references Facebook, and another says "You thought BlackBerry was all business." There is also a spot that tries to appeal to the holiday sentiment.

The common denominator in the campaign, running on network TV, outdoor, in print and online, is to show off the phone's multimedia capabilities, and in particular, the clickable touch screen that is the hallmark of the iPhone.

The Storm, at least theoretically, gives Verizon the ammunition to stem the tide toward AT&T, where the iPhone has been potent bait. Many industry watchers expect the biggest battle to rage between the iPhone and Storm, and some give Apple the edge for its brand cachet, consumer mind share and rich experience.

"From a multimedia standpoint, what makes the iPhone different is the user interface and experience it provides. From that perspective, it's ahead of the competition," said Brad Akyuz, an analyst at Current Analysis.

Smart moves
The iPhone is also making quiet, albeit incremental, incursions into the enterprise space where BlackBerries have long prevailed, and has just edged past BlackBerry to become the world's most popular smartphone brand behind Nokia, according to analyst firm Canalys.

Verizon wants it both ways for the BlackBerry Storm. The carrier's TV spot suggests the phone is a mass consumer, multimedia device but Verizon is also calling it "a secure, stylish workhorse."

Meanwhile, T-Mobile's Google G1 smartphone still has momentum on its side, and the company said it expects the phone to deliver through the holiday season. Importantly, the solid performance of the G1 paves the way for other phones based on its open, Android operating system to enter the market and potentially challenge the iPhone.

The G1 campaign's theme line, "Curiosity is everywhere," was developed by T-Mobile's agency of record, Publicis in the West, and plays into the search for information and knowledge -- Google's core business. TV spots feature folks from all walks of life looking into the camera with offbeat queries. As the campaign plays out, applications on the G1 spew out answers to the queries. One spot shows a couple of guys asking about a sci-fi convention in town; it's Google's Street View service that answers the call.

Emphasis on value
Largely, the carriers' 3G smartphone promotions have steered clear of value messaging in favor of teasing curiosity and imagination (Apple controls marketing of the iPhone independent of its exclusive carrier, AT&T).

But at Sprint, which is working with the Samsung Instinct smartphone, the pitch has leaned on its 3G network with an emphasis on affordability and the annual savings of its 3G plans compared with similar ones at AT&T and Verizon. Though it is pushing the new 3G Samsung Rant as an affordable 3G device alongside its plans and network, Sprint's messaging effectively diminishes the handset race, where it doesn't have bankable star power, and instead puts the spotlight on the economics of its voice and data plans.

Michael Davidson, a strategic planner at Sprint's agency of record, Goodby, Silverstein & Partners, defends the strategy. "That feels more meaningful because [the plans] are an ongoing cost. It's a bigger bulk of what you actually spend when you sign a contract," he said. "The handset is a small part of the total wireless bill."

In fact, handsets won't lead the gifting list: The subsidized prices require a contract. People looking to give the gift of communication generally opt for prepaid packages.
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