Cingular Wireless' Chief Marketing Officer Marc Lefar is drawing on both to win what is in effect a quarter-billion-dollar wager in the form of fourth-quarter ad spending. The bet: that an affiliation with Apple and Motorola on the iTunes Rokr phone will give Cingular an exclusive on the hottest product of the 2005 holiday season, enabling it to hold its lead in the wireless carrier standings.
It's a risky gamble. iTunes charges 99¢ for a song, while the wireless industry has been raking in cash with the $2 or $3 or more it charges for those 15-seconds snippets of music it calls ring tones. At the same time, more lucrative (from the carriers' point of view) over-the-air downloads of music are becoming reality with Verizon Wireless and Sprint scheduled to launch for the holiday season. Other options, such as downloading music to cellphones from the developing .Mobi Internet sites or other Web resources, would leave the carriers only with a little something, the charges for air time.
For the iTunes phone, where consumers simply transfer music they already paid Apple for and which already resides on their computer, there will be no bonus dollars for Cingular. The hope is that the target consumer will use the Rokr to ring up monthly data charges for things other than music, such as photos or text messaging.
Then there's the niggling fact of Apple's earlier partnerships that flopped: Just this summer, for example, Hewlett-Packard Co. called off its deal with Apple to resell iPods.
Mr. Lefar's task took a gut strong enough to pull the plug on the project if Apple and Motorola balked at its terms-enough music capacity and ease of use. The job of working with Apple's mercurial founder Steve Jobs also fell to Mr. Lefar, who had to win his approval for the advertising. (Mr. Jobs has been known to verbally beat up on even trusted creative partners.)
High stakes indeed, even for the man who controls a total marketing budget of $1.5 billion and who skillfully handled the massive $300 million push that melded Cingular with AT&T Wireless. "Cingular is taking the bigger part of the [marketing] bill," with the Rockr, "but its motivation is to attract and retain higher-value subscribers and win the battle with Verizon over technology leadership and coolness," said John Jackson, senior analyst, Yankee Group.
Seven days from launch, on a steamy August Atlanta morning, Mr. Lefar began his exercise ritual at 5:30 at his home in the Dunwoody section of Atlanta, the dream six-bedroom house where the front yard serves as the football field for neighborhood boys, and the soccer and basketball-coach dad joins in when time allows. At his office on the 12th floor of the Cingular building in North Atlanta, his real game is never out of mind, or sight for that matter, with towers housing Nextel and other carriers lurking outside.
One of the first orders of this day is the weekly staff meeting. Hurricane Katrina relief efforts, with its concerns about locating employees, restoring service and handing out satellite phones to police and rescue personnel, initially took the spotlight off putting the finishing touches on the code-named Project Holiday.
Already Mr. Lefar and his team have overcome a couple of what he euphemistically calls "showstoppers." First, Apple wanted to limit the number of songs on the phone to 25. Cingular required the number be upped to 100. Then Motorola appeared to have forgotten to include a "radio off" button in the design-that is, a way for the music player to operate during airline flights. The changes were dictated without Mr. Lefar raising his voice above a hush. His wife compares it to getting people's attention by whispering.
The phone isn't the iPod's iridescent white, but rather a silver-white color. Cingular wanted iPod's signature white earphone cords; the compromise is white with a Cingular orange stripe running through them.
Less than a week from launch and the perpetual motion of the hype machine is churning out mystery and "no comments" full tilt, thanks to Mr. Jobs, who has signed all parties to strict nondisclosure agreements. The media, both traditional and online, is lapping it up. When Apple distributes invites to "select" media and analysts for the Sept. 7 unveiling at San Francisco's Moscone Center, respected telecom analyst Roger Entner confirms to reporters for The New York Times and The Wall St. Journal what many following the business had known for a while: that Apple in fact has an iTunes phone from Motorola and it will be serviced and marketed through Cingular Wireless. The articles stir up another round of coverage from Seattle to Sydney. Mr. Entner, much to his surprise, is even quoted in Pravda.
Mr. Lefar and his team blow off Mr. Entner's "leak," perhaps because they suspect it was planted by a party in the deal. Mr. Entner won't say. But what does concern Mr. Lefar and Cingular executives is accurate information written about the phone in a chat-room posting, possibly leaking from an agency vendor, which was swiftly dealt with by Cingular.
The secrecy makes Mr. Lefar's own planning more perilous. Only a few top employees at Cingular were informed about the deal. Preparations have to be made covertly, usually on a need-to-know basis. Still, Web sites had to be readied. Creative had to be debated and tested. Heaps of materials had to be distributed. Point-of-sales posters had to be hung. Sales associated needed to be trained.
There's the unveiling of the work to the big chief Mr. Jobs. By a number of accounts, except Mr. Jobs or Apple, which characteristically declined to comment, Mr. Jobs "actually liked the work," contends Mr. Lefar. But then, Mr. Jobs went on to say that it was not as good as his own Apple ad campaigns, even though Cingular's effort riffs off Apple's groundbreaking "Silhouette" campaign.
The work from Omnicom's BBDO seems to take at least two different tacks. In one spot a woman walks down the street listening to her Rokr phone while her reflection in windows and puddles rocks out to the music. The shadow stops when the phone rings and she answers it. A second spot from the shop, newly named lead agency for Motorola, uses an array of celebrities including Madonna squeezing into a phone booth.
Sept. 7. Launch day. Mr. Jobs, his image projected on a giant screen, works his wizardry with a dexterousness perhaps last seen in San Francisco in the hands of turn of the century illusionist Charles Carter, or perhaps the last time Mr. Jobs took the stage for a launch event. With the media hyped for news on the iTunes phone, Mr. Jobs instead directed the auditorium's camera focus on the tiny fifth pocket in his jeans. From there, he pulled a new thin iPod Nano.
To no one's surprise, the Nano captures the next day's headlines, which also mention the iTunes phone, Motorola and Cingular, often in terms of an iPod peripheral. But by far the most ink is spilled on the latest iPod iteration. "Small, slender and surprisingly powerful" reads The Wall Street Journal headline. "The buzz was for the Nano iPod," said Ken Dulaney, VP-mobile computer at Gartner Research. "There was more in it for Jobs than Cingular at the end of the day."
"Nobody talked about Cingular," said Mr. Entner. "It's 75% Apple."
Worse, Business Week and a number of important tech Web sites such as Slashdot describe the phone as "underwhelming," a place-holder for Mr. Jobs' next move in the lucrative wireless space-a move analysts are uncertain will take place with the aid of Motorola or Cingular, for that matter.
Wall Street Journal tech tastemaker Walter S. Mossberg noted in a Sept. 15 column that "Apple is strangely unenthusiastic about" the iTunes phone. "Apple's heavily trafficked Web home page relegated the new phone to a small box underneath a giant photo touting its newest music player, the iPod Nano," he wrote, adding that after testing the Rokr, he and his assistant "share Apple's indifference."
Cingular executives said the deal gave them free rein to generate whatever publicity they could for the iTunes phone, and its news releases for print, TV and radio garnered hundreds of pickups. They also had no second thoughts about how the marketing dollars were spent for the launch, with separate creative campaigns from Cingular and Motorola, each effort serving the individual company's own marketing strategy.
Cingular believes it got its message out: It said that by midday Sept. 7 its "Make Me Dance" Web site got 340,000 hits from 113,000 unique visitors. Strategy Analytics projected Rokr volume worldwide at 760,000 phones in the second half of the year. (Other carriers include European providers O2 and Orange.) It expects Cingular, with almost 50 million subscribers, to sell about a half-million iTunes phones in the fourth quarter.
But the most important sale, according to Chris Ambrosio, an analyst with Strategy Analytics, was made by Mr. Jobs. The wireless-service carriers control content on the phones, but Cingular will not be making money on the iTunes product. "The significance of the deal is the carriers' willingness to offer off-network content which doesn't increase or improve their revenue," he said.
A quick look
Title: Chief marketing officer, Cingular Wireless
Born: Newark, New Jersey
Education: B.S. commerce, McIntire School of Commerce, University of Virginia
First job: Procter & Gamble finance and then brand management on Jif peanut butter, Duncan Hines baking mixes and Crisco cooking oil.
Hardest job: Selling books door-to-door to earn money for college
Telecom experience: GTE Wireless, VP-marketing; Verizon, VP-wireless Internet, data services and e-enablement; Cable & Wireless Global, CMO
Personal: Married, two boys
Prefers: First-growth Bordeaux, aged scotch, sushi. Comfort foods: macaroni and cheese and hamburgers.
Friends say he needs to improve: Running backhand.
Gadget he can't live without: Blackberry