The $35 billion merger is a watershed for the telecom sector in more ways than one. Not only will it likely result in more stable rates and less one-upmanship in ad claims, it will trigger a rationalization of spending in the category, which reached a dizzying $4.7 billion last year. So while Sprint Nextel will indeed unleash a short-term, half-billion dollar bid to create awareness, the days of outlandish category outlays are numbered.
"One plus one equals one and a half, not two," said Roger Entner, VP-wireless telecom at consulting firm Ovum. "In the long run, spending will go down."
Julie Ask, research director and senior analyst for Jupiter Research, said spending at more realistic levels is good news for an industry in which the cost of acquisition averages between $350 and $450 a customer. Even though Nextel and Sprint have the highest ARPU, or average revenue (per month) per user, in the category at $68 and $62, respectively, carriers should be working to spend less.
Mark Schweitzer, Sprint Nextel's designated chief marketing officer, said he hoped spending in the category would become more rational. Sprint Nextel intends to keep both brand names, so its communications will carry the line "Together with Nextel" or "Together with Sprint."
The companies declined to comment on the nature of the campaign expected to be unveiled later this month, pending regulatory approval. The branding and consumer effort will be handled by Nextel's shop, TBWA/Chiat/Day, New York, while Publicis & Hal Riney, San Francisco, will handle business-to-business.
For consumers, the rapid decline in mobile-phone rates-about 20% a year since 2000-is expected to slow, said Mr. Entner, as fewer contenders compete. And the category's old marketing saws are likely to fade, too. "We will cease to see claims that one network is the largest in the nation or maybe even the most reliable," said one agency executive working in the category. Instead, new mantras will center on innovation and how the phone can improve one's life.
Diminished also for some of the carriers will be the role of the ad icons which have grown up with the business. Verizon Wireless' test man has traded in his "Can you hear me now? Good" line for "It's the network" and the nerdy-looking character is being downplayed as a tagline rather than a central character in its spots. Sprint's commercials with the long-running trench-coat cloaked Sprint guy Brian Baker are expected to come to a halt, according to a number of executives working on the program. A Sprint spokeswoman said his fate is still being worked out in the creative process.