The AT&T deal, worth an estimated $20 million to $30 million annually, cuts across 15 properties of ESPN and ABC Sports. It is unrelated to AT&T's plan announced last week to acquire another major media company, Tele-Communications Inc.
NEW UNIT ESTABLISHED
Young & Rubicam's Media Edge, which buys media for AT&T, has created a separate New York unit to serve the telco giant. That new unit, called AT&T Edge, will be involved in deciding how advertising will be allocated across the Disney properties.
AT&T Edge's plan will include the creation of advertising tailored to the sponsored events.
AT&T becomes the first and exclusive sponsor of college football's Rose Bowl, as well as a strategic advertising and marketing partner on venues including ABC's NFL `'Monday Night Football," ESPN's NFL "Sunday Night Football," ESPN Magazine, ESPN radio, the Espy Awards, and the ABCSports.com and ESPN SportsZone Web sites.
"This is indicative of what we're trying to do in changing the way we go to market and changing the way we deal with partners," said Steve Graham, AT&T VP-marketing communication. "The leverage is in forming better partnerships and relationships where the value created is well beyond a media buy."
He indicated more such deals are in the works, representing the way AT&T is seeking to buy media in the future.
The Rose Bowl sponsorship stems from ABC's ownership of the first College Bowl Championship Series, covering the Rose, Orange, Fiesta and Sugar bowls. AT&T also gets communications category exclusivity on those other three games.
AT&T plans to tag the Rose Bowl as "the Rose Bowl presented by AT&T."
This is the first time the two Disney sports properties have worked together with an advertiser in an extensive partnership.
"ESPN and ABC Sports have some great partnerships, but this is one of the most important," said Lawrence Fried, ABC exec VP-marketing and general sales manager. "It's very appropriate of the value we're getting from AT&T."
Two demographic groups reached by the marketing partnership are males and college students, consumers AT&T has played to in the past, but not in such a significant way.
Mr. Graham said the bowl games do skew male, but less so than traditional sporting events. AT&T sees the college audience not only as current high-level communicators, but also as future ones.
Although details on specific promotions or advertising are still being hammered out, AT&T's entire product line is expected to be featured, from prepaid calling cards to wireless service to traditional long-distance service.
Steve Lanzano, exec VP-planning director at Media Edge and head of the new AT&T Edge unit, said it will pull all those products together to accomplish three goals for AT&T: relating to customers, differentiating the AT&T brand and building revenue.
Mr. Lanzano said he sees other large clients probably wanting to pursue similar strategies in the future, which could lead to additional dedicated units within Media Edge.
AT&T Edge will be a complete operation with such specialties as multicultural and direct marketing included.
COMPETING WITH ALL MESSAGES
"You're not just competing with other competition in your category anymore, you're competing with messages from everyone," Mr. Lanzano said. "In order to create consumer attention, you have to create multimedia events you know your customer base is interested in. We have to become part of that experience. It's a home run when you have custom creative or sponsorships that really tie in on the communications level."
$600 MIL SPENDING IN '98
AT&T spent about $476 million in measured media last year, down about 28% from 1996, according to Competitive Media Reporting. Through March of '98, AT&T spent $149 million; if spending continues at similar levels, it would approach $600 million for the year.
AT&T's Mr. Graham said the ABC/ESPN deal doesn't necessarily mean increased spending; instead it's a continuation of the emphasis to leverage dollars spent to achieve the biggest effect.
He explained: "There are two ways you can create leverage that extends [ad] dollars -- lower your costs or increase the impact. We're really looking to increase impact."