Telco Advertising: Dialing Back Their Ad Spend

Merger Mania Dampened Wireless Marketing Efforts

By Published on .

NEW YORK (AdAge.com) -- Mergers and an upcoming paradigm shift have started to take their toll on telecommunications media spending. The U.S.' third-largest category slipped to 4% media growth in 2005 from 14% in 2004.
Overall telcom advertising spending dropped 12.1% in 2005.
Overall telcom advertising spending dropped 12.1% in 2005.

Media outlays among the top seven wireless carriers, where most of the spending resides, actually dropped 12.1% to $4.16 billion in 2005, reflecting in part the merging of Sprint Corp. with Nextel Communications, and SBC Communications' $16 billion buyout of AT&T Corp. in the final quarter.

AT&T rebranding
The subsequent rebranding of SBC/AT&T Corp. as just AT&T with an estimated $1 billion campaign did give an ad shot to the category early this year. But that campaign, from GSD&M, Austin, Texas, and Rodgers/Townsend, St. Louis, has run its course. Wendy Clark, VP-advertising for AT&T, says a more limited effort is planned when AT&T takes over BellSouth Corp., expected later this year. Spending will center on the nine BellSouth states, and some ads from the previous campaign will run again.

"The philosophy at AT&T is that we don't intend to be the largest spender in the category," says Ms. Clark. "We want to outsmart, not outspend" the competition.

But most significantly, within the next 18 months or so, the telecom battle will shift from sales of individual services, such as wireless, to bundled offerings as telcos pitted compete against cable bundles. Cable companies have had the luxury of advertising on their own interstitial time. Now, AT&T (with its U-verse entertainment service) and Verizon Communications (with its fiber optic service, FiOS) have their own time to air advertising, so they can cut back on expensive network buys. "We will start to locate [ads] on our own content locations," Ms. Clark says, adding that other telcos and cable companies will begin to "take advantage" of this tactic as well.

Smitten with new media
Also expect a media shift away from TV. Ms. Clark is smitten with results from new media. Podcasts on ABC.com had 87% recall of sponsors by users of the program, she notes.

As for Cingular Wireless, which will be renamed AT&T Wireless, Ms. Clark says it's premature to say if the Cingular brand will become an ingredient in a new AT&T telecom bundle or if it will simply become irrelevant in the new telecom-marketing era.

Some don't think the telecom media budgets will disappear overnight. "I don't see that changing anytime soon," says Jeffrey J. Simmons, director-technology programs at CTIA-The Wireless Association.
In this article: