These days, many marketers look upon telecom companies with a certain degree of pity. We see a number of challenges that are tough to meet – increasing competition within what amounts to a commodity business sector, lack of ways for telecoms to truly differentiate themselves in the marketplace, lack of customer loyalty.
The truth of the matter is, people are less mindful of who provides their local telephone service, their broadband Internet access, their wireless phone service, or their collect call service. Consumers and businesses alike seem to care only that the services actually work as advertised and that the rates are as cheap as they can be. This is reflected in the advertising that we consistently see from telecom providers – A gazillion minutes for $19.95 a month, "Save a buck or two on collect calls," calling plans with price and savings as the primary drivers.
Poor telecoms. It's too bad they're stuck in what amounts to an omnipresent price war and that they have to try to undercut one another to acquire customers. Wouldn't it be terrific for the telecoms if they had service offerings that were differentiated from one another in ways that were meaningful for the consumer?
Well, it appears that we're headed in that direction. Next generation wireless functionality and intelligently-bundled suites of telephone, wireless, Internet and such are two things that will help telecoms to create unique offerings and save the sector from playing in the commodity services arena.
"Now that the 3G network has officially launched, we will see companies differentiate themselves by touting megabytes instead of minutes," said Heidi Browning, media director at interactive agency Organic. "Applications for 3G enabled phones will serve as key points of differentiation. The applications will enhance your out of office business communications by integrating with internal email systems and allow attachments to be sent and viewed...High speed internet access, color screens, functionality that benefits both business and consumer audiences will be the focus of 2003."
3G is the catchall term for third-generation wireless services. It encompasses a variety of proposed standards and new voice and data services, including videoconferencing, Internet access and interactive application sharing, to name a few. For the first time in a while, telecoms have the opportunity to differentiate and diversify their wireless offerings by providing unique value to the end user. And consumers will make their wireless choices based on which company can provide the most useful mobile experience – applications, connectivity and functionality - and not on who can provide the best prices for wireless minutes.
"I think you’ll see a departure from the constant promotional barrage of X thousand minutes for $19.99 a month," said Larry Everling, director of web sales for Nextel Communications. "From a valuation standpoint, you can’t sustain the marketing expense measured against that tier of revenue while trying to expand your network and service offerings…Customers are willing to pay more for value, which will mean broader use of data services over the handset."
The notion of smart bundling of telecom services is also a way in which telecom companies can differentiate themselves from the competition. An October 2001 study by the Yankee Group showed that 30 percent of U.S. consumers are interested in buying a bundled package of voice, data and video from a single provider. That number jumps to 44 percent among early adopters of technology. What drives this consumer desire? Evidently, it's the simplicity – over 70 percent of the Yankee Group's poll respondents cited a consolidated bill as the main perceived benefit of a bundled package. Sixty percent cited simplicity as a driver, while only 44 percent said they were motivated by discounts (respondents could give more than one answer to the question).
"The answer has been intelligent bundling," said Tom Cotton, general manager of DDBQ, an agency built by Omnicom to handle marketing duties for Qwest Communications. "Last night my wife and I were sitting in my office at home having a late dinner and watching CNBC, and on comes a new campaign for Verizon that’s based on the Beatles song All Together Now. It’s a bundling spot that goes through all the different services you can get through Verizon. My wife and I looked over mouth agape at each other; we produced that campaign with that song for AT&T in 1996."
"[E]ach individual product is becoming a commodity; the difference is going to be in really smart marketing of multiple products and giving prospects both a perception and delivery of simplicity while also giving them enough choice not to feel muscled into one or two bundled choices," he said. "That’s tricky but it can be done, and it’s critical for marketing success."
Market the Experience
The latest trend in telecom advertising showcases how bundled packages and next generation wireless services can impact the life of the end user. There's the Verizon campaign that Cotton mentioned. AT&T has been particularly visible with its mLife campaign. Sprint debuted a campaign recently touting the benefits of its 3G services, including the ability to take pictures via a next generation handset and send them wirelessly. These campaigns tend to resonate with the end user by showcasing these services as essential must-haves for a "mobile lifestyle."
"The AT&T brand name is as important to our customers as it is to us," said Bryan Trullinger, director of web marcom for AT&T Wireless. "We nurture and protect the brand by continuing to invest in our reputation for providing quality and innovation in our services. mLife from AT&T Wireless is helping us communicate a broader vision for all that wireless can be."
Andy Chapman of Atmosphere Interactive, which counts Cingular among its clients, points to "consistent new product innovation and building a strong and differentiated brand" as two ways to combat the commoditization of the industry. "It is easy to fall into the retail price trap and to be lumped in with all of the other offers that are essentially the same. The real challenge is to provide a unique product offering, for example technology or data capabilities that have not been exploited, in a compelling brand experience that taps into consumers’ lifestyles or needs."
Why Internet Advertising?
Telecoms were among the first to leverage the web as a marketing channel. According to popular Internet lore, AT&T was the first to pay to place a banner ad with Hotwired. Telecoms have always liked web advertising. Why? There's the efficiency at driving low-cost leads and sales of products and services. Then there's the notion that the telecom's most valuable customers tend to be active online consumers.
A July 2002 study from Vividence shows that Internet users who visit the sites of telecom companies spend 32 percent more on telecom services than offline customers. The effect is particularly pronounced in the areas of local telephone, long distance and wireless services, where online telecom consumers spend nearly 100 percent more on the average than their offline counterparts.
According to Everling, the web helps Nextel to target high value customers. "No marketing medium can target better than interactive," he said.
Then there's the efficiency that online media can provide with regard to direct response.
"With interactive marketing we can deliver relevant communications to consumers at every stage of the consideration cycle," said Browning. "Interactive marketing allows us to quickly analyze, measure and learn from our efforts, which is essential in delivering on our larger business objectives."
Telecoms use the Internet to drive low-cost and high-quality leads and sales for products and services alike. Be sure to read our interview with the folks from DDBQ to see an example of the sophistication of online direct response strategies and tactics in use by that agency.
Integrated Campaigns a Cornerstone
One challenge for telecom marketers is the notion of integrating online campaigns with marketing through more traditional channels. Given all the offers and incentives, as well as the umbrella campaigns focused on lifestyle and brand, this constitutes a bigger challenge than it might for marketers who operate in different business categories.
"We try to integrate as closely as possible with the traditional advertising to provide a clear and cohesive message to consumers," said Browning. "We incorporate offline messaging, imagery and in some cases 30 second spots within the interactive media units to bring offline advertising to life online. In addition, we coordinate closely with offline media placements and timing to maximize the impact of our integrated efforts."
"Nextel.com and 800-NEXTEL9 are the standard calls-to-action for all of Nextel’s advertising, and the Web site is the most popular single marketing-driven destination," said Everling. "Monthly traffic to our Web site has grown by 25% this year to date, largely due to mass media advertising. The wireless segment is extremely competitive with regard to traditional marketing, so share of voice is a constant battle, and we typically get out-spent by the competition. We believe online marketing, intelligently integrated with off-line, such as our cross-media professional sports league sponsorships, provides enhanced marketing value beyond the actual cost."
For many telecom marketers, the idea of integrated campaigns and multiple consumer touch-points goes hand in hand with the promise of the very services telecoms provide.
"Traditional advertising in conjunction with interactive can increase the effectiveness of both," said Trullinger. "It’s really about offering consumers a choice about how and when they choose to interact with your company—whether it’s over the phone, in stores or online."
