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Friday, October 31, 2003
Wireless Gets The Priciest Plugs

If you're standing in a remote cornfield, Verizon Wireless wants you to know its phone works well there. If touchy feely is your thing, AT&T Wireless wants you to "reach out" with its phone. Sleek and sexy T-Mobile USA, by the way, wants to slip its phone into your back pocket.

The wireless companies are marketing like mad to get your attention in what may go down as one of the more expensive ad wars in American business history.

Among all American brands last year, the top two ad spenders were both telecoms -- Verizon and AT&T -- and wireless consumed the bulk of their ad dollars.

Top spender Verizon Wireless is on track to spend nearly $1 billion on advertising this year, landing the company on a rarefied list of brands that spend that much in a year . Collectively, the wireless industry spent $3.4 billion on ads last year and another $1.7 billion in the first half of this year, according to TNS Media Intelligence/CMR.

That was twice what the beer companies spent, and far exceeds what Coke and Pepsi invested in pitching all of their flavors, combined. The carriers are spending about as much as the drug companies that made Viagra and Prilosec household names -- and this winter they're expected to kick it into even higher gear.

"They're all saying, 'Can you hear me now?' Well, you'd have to be hearing impaired not to hear them," said Mike Donahue, executive vice president of the American Association of Advertising Agencies, borrowing Verizon Wireless's quip. "It's a gigantic category."

More than half of Americans own cell phones, making the industry richer and more competitive than ever. Only the biggest among the companies are expected to survive, so they are racing to target each others' customers, undercut each others' prices, and engender greater loyalty among fickle customers who, starting next month, will be allowed to keep their phone numbers when switching to another carrier.

Successful ads must lead, of course, to a sale. But it's hard to pinpoint the financial rewards of advertising, so instead companies often rely on another measure of success: how popular an ad becomes -- like Wendy's "Where's the beef" or Nike's "Just do it."

AT&T's slogan, "Reach out and touch someone," became so famous after its launch in 1979 that AT&T Wireless dusted it off this month when it started its new "Reach Out" campaign to replace the cryptic "mLife" ads of the past two years.

"It's one of the great slogans of all advertising," said Neve Savage, vice president of marketing and communications for AT&T Wireless.

Though AT&T Wireless said its mLife campaign helped the company reel in new customers and boost revenue, critics ridiculed the ads as vague and confusing. Savage acknowledged that mLife lacked the "emotional quotient" of AT&T's earlier messages and didn't tap the company's heritage.

"There's a huge amount of advertising in this industry, and a lot of it focuses on rates, rate plans, equipment and so forth, but people don't buy that," Savage said. "They buy the ability to reach out. [MLife] was less about the end result of why people buy wireless, which is about relationships. Verizon can't reach out, Cingular can't reach out, T-Mobile can't reach out. It's ownable by us."

The AT&T brand alone is huge. Combined, all brands of AT&T spent $1.01 billion in advertising last year, ranking No. 2 on Advertising Age magazine's list of top spenders, just behind Verizon Communications Inc. and its divisions. More than half -- $652 million -- was spent by the company's spinoff, AT&T Wireless.

All of the Verizon brands spent $1.02 billion last year, including $828 million just for Verizon Wireless, according to Advertising Age and TNS. Verizon Wireless -- a joint venture between Verizon Communications and Vodafone PLC -- upped its advertising this year, spending $424 million on ads in the first six months.

The ads are getting so much airtime that even the entertainment industry is taking cues from the cell phone campaigns.

A recent "Saturday Night Live" skit poking fun at a Cingular Wireless commercial met with amused appreciation from some Cingular executives. In the movie "Out of Time," Denzel Washington's character mimics Verizon Wireless's "Can you hear me now?" -- a reference that a Verizon spokeswoman calls an exercise of free speech, not a spoof or trademark infringement.

"When people start using your line, you really have made it," Donahue said.

With six national carriers vying for the limelight, the competition for mind share can get vicious.

"You can't even lie down, you can't even stop thinking," said Melanie Vandervalk, vice president of marketing and sales for Verizon Wireless.

The nerdy guy -- "test man" -- featured in all of Verizon's ads was found after an exhaustive search for the right persona, she said.

"We were looking for someone memorable. Something that would cut through the advertising clutter," Vandervalk said. "We went with the engineering type on purpose, [because] network superiority has always been our mantra."

Sprint PCS's deadpan humor often connects.

A recent ad in which Sprint's icon -- the man in the black trench coat -- ministers to a support group of disgruntled cell phone users ranked as the most memorable among wireless ads, according to the most recent quarterly survey of television watchers conducted by Intermedia Advertising Group. By Christmas, trench-coat man will have recorded 100 TV ads.

Nextel Communications Inc., which launched a new campaign last month, also is targeting the funny bone, including a spot depicting a boardroom meeting taking place entirely over its walkie-talkie phones. That ad ranked fourth in the IAG survey.

Cingular Wireless, the nation's second-largest carrier, ramped up its advertising by producing 20 new television ads in the last month.

"We're kinda rubbing our palms together and getting ready to go," said Daryl Evans, vice president of marketing and communications for Cingular, which is touting package deals in conjunction with its parent companies, SBC Communications Inc. and BellSouth Corp. Cingular spent $504.4 million in advertising last year, and $258 million in the first half of this year, according to TNS.

No matter what the approach, repetition and consistency are key, said Robin Hafitz, co-chair of Mad Dogs & Englishmen, an advertising firm in New York.

"'Can you hear me now?' [has become] annoying because of the repetition, but I think it drives home the point, and it works for that reason," Hafitz said. Repetition can also shape tastes. Having Catherine Zeta-Jones appear on TV, in newspapers and postered all over T-Mobile's stores affirms something else about the company's new picture phones: "It's a sexy idea."

There are plenty of reasons cell phone companies need to be in your face.

The cost of talking on cell phones has dropped 58 percent over the past three years, according to market researchers at the Yankee Group, at the same time the carriers have invested billions of dollars in network upgrades so they can offer a bevy of new services. To pay for those networks, the carriers want people to send more photos, e-mails and text messages over their new high-speed networks. But so far, data accounts for a tiny fraction of their revenue.

To top it all off, the carriers are girding for Nov. 24, when dissatisfied wireless customers will have the freedom to defect to a new carrier and take their numbers with them. The result has been a shouting match to persuade people to stay put and buy more.

The messages may be getting through to some, but not to D.C. resident Scott Henrichsen.

"I find the cell phone industry incredibly annoying," said Henrichsen, a mortgage broker who moonlights as a pianist and carries a bare-bones cell phone. "They put way more options [on] than a sane person would need."

Henrichsen said he admires the ads but thinks the money could be better spent: "I'd rather that they work harder not to drop my call on the parkway."

Reported by Washington Post

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