AT&T Wireless acc't presents challenge

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With the spinoff of AT&T Corp.'s wireless unit into an independent company set to occur next month, all eyes are on the review of its $400 million account prize.

The agency that wins the AT&T Wireless account will face the dual challenge of leveraging the equity of the AT&T brand name, while establishing a clear and separate identity for the wireless unit.

The mega-account review, which began in March, swung into high gear last week as four finalists emerged: True North Communications' FCB Worldwide, New York; Publicis Groupe's Fallon, Minneapolis; WPP Group's Ogilvy & Mather Worldwide, New York; and Omnicom Group's TBWA/ Chiat/Day, Playa del Rey, Calif. (AdAge.com, May 2). MagikBox, Cos Cob, Conn., is handling the review, which eliminated contenders Bcom3 Group's Leo Burnett USA, Chicago and Publicis' Saatchi & Saatchi, New York. FCB, New York, is defending the account; the agency's San Francisco office held the account since 1995.

The spinoff of AT&T Wireless is set for June, along with the agency decision.

"AT&T maybe has the single most important opportunity and challenge among all the other players in the industry, because it hasn't reinvented itself or created a new brand as its competitors have," said Jeffrey Kagan, an independent telecom industry analyst. AT&T Wireless, No. 3 in the category behind Verizon Wireless and Cingular Wireless, will become one of three independent companies AT&T plans to cut loose. The others, AT&T Broadband and AT&T Consumer, are also consumer businesses.

"I think they'll leverage the name recognition and brand recognition of the historical AT&T moniker, but they're going to be offering different islands of service. Each individual unit will sell the services that can operate on their own network," Mr. Kagan said.

Yankee Group VP Meredith Rosenberg questioned how AT&T can run three separate consumer units without causing confusion. "From a consumer perspective, you can get phone calls from three different companies. How is a consumer going to know the difference?"

Wall Street is keeping a close watch on the agency hunt. Interpublic Group of Cos.' bid to acquire True North-parent of incumbent agency FCB -for $2.1 billion still awaits True North shareholder approval. Some analysts, still evaluating the worth of that price tag, will take into consideration whether the $400 million account stays at FCB or not.

However, Alexia Quadrani, an analyst with Bear Stearns & Co., New York, noted that Interpublic is not buying True North just for one client. "I don't think [a loss] would be a deal-breaker," she said.

The high-stakes review has all the makings of a showdown. In recent weeks, FCB assembled a new agency team in New York to pitch the account. FCB, New York, currently splits AT&T's consumer advertising with WPP's Y&R Advertising, New York. If FCB wins the account, AT&T Wireless would join a tech stable that includes Compaq Computer Corp. and Samsung Electronics. Some insiders, though, perceive Ogilvy as the frontrunner for its IBM Corp. pedigree and potential synergy with Motorola.

"Ogilvy is certainly a very strong contender," said one agency executive from one of the contending agencies. Fallon and TBWA bring an undeniable creative swagger to the review mix, a move that speaks to AT&T's desire to fashion a new and nimble identity for the wireless business apart from the Ma Bell legacy.

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