Verizon making the right calls in first year

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Verizon Communications, the company created by the nearly year-old merger of Bell Atlantic Corp. and GTE Corp., has got the number of its naysayers.

During the $70 billion merger's ramp up last year, Verizon faced numerous challenges ranging from whether its funky moniker and hip new image would catch on with customers, to Bell Atlantic's spotty service reputation. Apart from crafting an altogether new image, Verizon needed to break into the broadband, data and long distance segments.

Then, there was the matter of consolidating Bell Atlantic's and GTE's ad and media agencies not only to achieve greater efficiencies from a cost standpoint, but to create a unified and relevant communications brand. The process began late last year when Verizon consolidated media at Cordiant Communications Group's and Publicis Groupe's Zenith Media and Interpublic Group of Cos.' DraftWorldwide, both New York. Then in April, Interpublic's Lowe Lintas & Partners Worldwide, New York, won consolidated creative duties, as Verizon ended relationships with Havas Advertisings' Arnold Worldwide, Boston, WPP Group's Lord Group, New York, and True North Communications' Temerlin McClain, Irving, Texas. Verizon uses Burrell Communications Group (49% of which is owned by Publicis), Chicago, as its agency for African American advertising and La Agencia de Orci & Asociados, Los Angeles, for Hispanic advertising.

Verizon spends an estimated $500 million to $600 million annually on advertising, media and marketing. That number is expected to increase modestly as Verizon funds a bevy of new sports and entertainment sponsorships. The figure includes advertising for Verizon Wireless, which is run as an independent company set to spin off in the fourth quarter. Verizon Wireless' agency of record is True North's Bozell Worldwide, New York.

The process of becoming Verizon wasn't, and still isn't easy, said company executives, but as the merger approaches the first anniversary of its approval June 30 by the Federal Communications Commission, industry analysts and insiders said the company appears to be firing on all cylinders, both from a brand and business standpoint. Verizon's stock has been trading near its 52-week high of $59.37, closing at $53.30 on June 7.

"I think Verizon is doing exactly what Verizon needs to be doing. Verizon is hitting a homerun," said Jeffrey Kagan, an independent telecommunications industry analyst. "A year ago, they were a number of separate companies, technologies and people. A year later, they could have been a patchwork quilt of competing and conflicting business units and people, but what they are is a smooth-running machine. It's more than just name-deep. It's a new philosophy."

"Where it's made a big difference is in the Verizon Wireless name," said Paul Wright, a VP with Loomis Sayles & Co., a Boston-based investment firm. Mr. Wright notes that with its national footprint, Verizon Wireless is a bright spot and a potential cash cow as it revs new services.

"One thing that Verizon has done very well is to effectively rebrand the entire company and walk away from the GTE and Bell Atlantic brands, which was a fairly gutsy move," said Bob Lane, a telecom analyst with the Yankee Group.

Customer satisfaction is also on the rise. The American Customer Service Indicator, a survey run by the University of Michigan, placed Verizon and BellSouth in a virtual dead heat for superior customer service.

But significant challenges remain, as the company aggressively moves into new, higher growth areas-broadband data, DSL and wireless services for consumers and businesses. It's also seeking regulatory approvals to offer long-distance services which are now only available in New York and Massachusetts.

"We are already recognized among the top brands in the country, which is great for a nascent brand," said Janet Keeler, senior VP-brand management and marketing services, Verizon Communications. She said the company's name and logo are beginning to break into brand territory inhabited by AT&T Corp., FedEx Corp., McDonald's Corp. and MasterCard with high recall scores. "The new name allows us to open up the Internet and move into innovative new technologies," Ms. Keeler said.

Verizon accomplished the conversion of more than 60 million customers nationwide since last August. The company has nearly completed the changeover of 70,000 trucks, 18,000 buildings and more. It mails about 90 million bills per month, all of which had to be reworked, along with inserts.

But it doesn't end there. Ms. Keeler and her team are now in the process of aligning more than 700 product and service names of the former Bell Atlantic and GTE, like call waiting and voice mail, which are referred to in multiple ways. She hopes to complete the process by first quarter 2002. DeSola Group and Interpublic's FutureBrand are assisting, both New York.

Ms. Keeler's biggest challenge, heading into year two of the merger, is shaping a consistent message of brand, "driving it through all of the business units ... it's something that takes a lot of time and a lot of effort and it never stops, it's a circular process."

Meanwhile, under Lowe Lintas, Verizon expects to embellish on the young, hip image it's carved out by embracing a solutions positioning that Ms. Keeler said will attempt to show how Verizon is an enabler of technology. Long-distance advertising in Western states, and DSL service advertising will appear first, in advance of brand work. Spokesman James Earl Jones will remain, but may have a few friends join him to pitch unique service offers.

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