Telecom shops brace for chaotic 2007

As Sprint creative account goes into play, speculation builds about AT&T review

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After only a few days, 2007 looks like it will be tumultuous for agencies and media companies working in the $7 billion telecom market.

Sprint Nextel Corp., the nation's No. 3 wireless carrier, last week put the creative portion of its $1.6 billion marketing account into review. This comes after AT&T, which cleared the final hurdles in its acquisition of BellSouth, indicated that agency reviews may be in the offing (see story, P. 3) and a holiday season that saw turnover in Verizon Wireless' marketing department.

Contenders for the Sprint account won't be announced for a few weeks, Sprint spokeswoman Mary Nell Westbrook said. At deadline, it was unclear whether the incumbents were invited to participate. The review is being led by Chief Marketing Officer Mark Schweitzer and his newly appointed lieutenant, Bill Morgan, a veteran telecom-marketing executive with SBC experience. Among the likely contenders are WPP Group agencies such as Ogilvy & Mather, which handled the AT&T Wireless account and developed the "Raising the bar" tag line still used by Cingular Wireless. Omnicom Group's Goodby, Silverstein & Partners also could be involved. Goodby handles Comcast, one of the cable companies in Sprint's joint venture to provide wireless service for cable-company bundled offerings.

This year "is going to be the year telecommunications changes," said Jeff Kagan, an independent telecommunications analyst. AT&T and Verizon Communications are positioning themselves to go head-to-head with cable companies in offering a full range of well-priced bundled services, allowing consumers to pick one carrier with the best-priced package for all their needs. Comcast and other cable companies are just starting to offer wireless services under a joint venture with Sprint. "Competition will be back," said Mr. Kagan.

"Right now, vendors, including advertising companies, will retain their contracts," said Michael Coe, a spokesman for AT&T. "At some point, there'll be evaluations," he said. AT&T and Cingular together spent an estimated $2.5 billion in marketing in 2006.

At the same time, there has been major turnover at Verizon Wireless, where, over the holiday season, CMO John Stratton moved to parent company Verizon Communications as executive VP-chief marketing officer, a newly created position. Traditionally, Verizon Wireless, 40%-owned by Vodafone, has kept its marketing separate from Verizon Communications, although the two share a similar-looking logo. Now, however, some executives at the companies say they anticipate the two brands will work together more closely.

Verizon Communications spokesman Jim Smith said it would be "premature" to discuss any agency changes at the telecom, but added: "An integrative force that honors the notion of sharing the same brand identity is in place now."
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