Marketing Campaign Case Studies

Sunday, March 9, 2008


In the 1990s the telecommunications giant AT&T found itself competing against new rivals. Telecommunications companies had expanded their products and services beyond long-distance telephone service and were offering cellular phones, Internet access, and cable television. Consumers were satisfied with the new low-priced choices available to them but were often overwhelmed by the number of companies entering the telecommunications marketplace. AT&T chose to address this increasing complexity by establishing an emotional connection with consumers in an advertising campaign tagged ‘‘It’s All Within Your Reach.’’
Introduced in early 1997, ‘‘It’s All Within Your Reach’’ did not address the nuts and bolts of AT&T’s product offerings, nor did the campaign mention the pricing of its various services. Instead the TV spots that ran through 1998 depicted scenes in which communications technologies made customers’ lives better in various ways. For instance, one spot showed a working mother who was able to field a conference call while entertaining her children at the beach. Another commercial showed a son visiting Vietnam in order to understand what his father experienced there as a soldier; during his trip the son made an emotional phone call to his father using an AT&T calling card. The campaign’s budget was $53.3 million in its first year and $44.6 million in its second.
The campaign was well received by consumers and advertising-industry critics, and it won numerous awards, including a Gold EFFIE in 1998. Although AT&T continued to employ the campaign tagline in 1999 and 2000, it did virtually no corporate-image advertising in these years, and its brand image came under fire for its lack of focus and relevance.

The company name AT&T was at one time synonymous with long-distance phone service, but during the 1990s the telecommunications industry underwent dramatic changes. Competitors such as MCI and Sprint were steadily gaining market share at AT&T’s expense. In the wake of deregulation, long-distance and local phone companies began dipping into each other’s markets, offering the variety of services AT&T once had a unique hold on. New, smaller, and more aggressive competitors had also surfaced, offering ‘‘dial-around’’ services that gave consumers the ability to punch in an access code to circumvent their long-distance carrier. In addition, emerging technologies such as Internet access, electronic commerce, and wireless phones were changing the face of telecommunications and forcing AT&T to alter its business strategy.
In this fiercely competitive marketplace AT&T’s growth had stalled, and its stock value was falling. The consumer division was losing customers more rapidly than the company had anticipated. In 1996 AT&T’s consumer long-distance revenues grew only 1 percent, and its business-division revenues climbed just 5 percent. AT&T claimed 54 percent of the residential long-distance market in 1996 as opposed to 60 percent just one year earlier.

‘‘The telecommunications market had steadily become a commodity category. It was all about price,’’ stated Elizabeth McKee, vice president and account director at Young & Rubicam Advertising. In the early 1990s AT&T was swept up in the price wars with other longdistance providers. In 1997 it recognized that, as a leader and the company with the most to lose, it needed to step above the price fray. Although separate advertising campaigns were used to promote specific products and services, AT&T sought to generate broad emotional resonance around its brand with the ‘‘It’s All Within Your Reach’’ campaign—and to do so in a way that portrayed it as attuned to the changing telecommunications landscape.
The intended audience for the brand campaign was, accordingly, ‘‘primary active networkers,’’ which AT&T defined as people who were balancing family and work and who actively communicated by traditional phone, wireless phone, or the Internet. AT&T was not alone in targeting this core market. The entire telecommunications category had begun shifting its focus from longdistance callers to the active networker. Technological innovations were rapidly providing consumers with multiple ways to communicate. In order to stay competitive, telecommunications companies needed to provide a full spectrum of these products and services. Some unusual corporate alliances formed in 1997 to take advantage of synergistic technologies. For instance, the Internet giant America Online (AOL) created a joint offering with Tel-Save, a long-distance provider. According to Wendy Brown, vice president of electronic commerce at AOL, online users tended to have higher than average incomes and higher than average monthly phone bills. While the average consumer spent about $22 each month on long distance, the average online user spent about $40.
Despite its declining long-distance market share, AT&T was well positioned to compete in this new marketplace in which companies sold a bundle of services not limited to long distance. A BusinessWeek article in 1996 noted that AT&T had all the right ingredients for success: an expansive cellular network, plans to offer local service in every state, a stake in pay-TV service, and an Internet strategy. In order to gain and keep the business of these active networkers, AT&T recognized that it would have to fulfill active networkers’ needs in fresh ways. AT&T WorldNet president Dan Schulman told Advertising Age, ‘‘As we look into the future, we will start transitioning our customer care from ‘fix it when it’s broken’ to ‘help people with the new technology and enable them.’’’

Telecommunications commercials historically performed poorly in consumer polls that measured campaign popularity and effectiveness. Of more than 90 spots reviewed by USA Today ’s Ad Track since 1995, telecommunications spots consistently ranked among the least popular and most disliked campaigns. Consumers complained that the commercials were often confusing, competitive, and mean-spirited.

In previous years the long-distance market was AT&T’s stronghold. But in the face of so many new competitors, it found itself losing ground. According to the Yankee Consulting Group, AT&T’s market share for long-distance phone services was chipped from 62.7 percent in 1995 down to 60.6 percent in 1996.
The breadth of telecommunications services had expanded to such an extent that simply defining AT&T’s competitors was difficult. Two years earlier the so-called ‘‘Big Three’’—AT&T, MCI, and Sprint—had controlled 90 percent of the long-distance calls in the United States. Suddenly smaller, more flexible rivals such as Telco Communications, Excel Communications, and Qwest were nipping at that market share. AT&T, as the market leader, took the hardest blows. In July 1996 AT&T reported a scant 5 percent growth in longdistance call volume compared with 15 percent for MCI and 19 percent for Sprint. Local phone companies also presented a challenge to AT&T when they began providing long-distance service. A Price Waterhouse survey in 1997 showed that 40 percent of those consumers polled preferred to get their telecommunications service from a local phone company, while only 21 percent wanted it from a long-distance carrier. ‘‘Dial-around’’ companies also bit into AT&T’s market share. These services offered callers the ability to dial into a discount service on a call-by-call basis, circumventing their long-distance carrier. Prepaid calling cards presented another assault on AT&T’s core business. These cards allowed callers to pay in advance for calling time with smaller, alternative carriers.
The advertising campaigns produced by AT&T’s major competitors continued to fan the flames of the price war. MCI promoted the value of its long-standing Friends & Family calling plan and 1-800-COLLECT service, and Sprint commercials featured actress Candice Bergen explaining the company’s low-cost calling plans. Advertising for the smaller telecommunications companies focused almost exclusively on their inexpensive rates. In the emerging telecommunications category of Internet services, AT&T was up against large competitors such as AOL and Microsoft as well as local Internet service providers. This market represented tremendous future potential; once the glitches in Internet-voicecommunication technology were resolved, the Internet promised to be a new source of long-distance and international calling. In the expanding arena of wireless services, AT&T’s strongest competition came from NexTel Communications and Sprint. In April 1997 Jeff Kagan, president of Kagan Telecom Associates, a telecommunications consultancy group, summed up the competitive environment in a USA Today article. ‘‘AT&T has got to move quickly,’’ Kagan said. ‘‘A year from now, it will either be on top of the world or eating dust. It won’t be the same. The world is moving too fast.’’

In 1997 AT&T worked with Young & Rubicam Advertising to develop a new marketing strategy. AT&T no longer wanted to compete solely on the basis of price. The new strategy would focus on building longlasting relationships with customers, not simply selling specific services or products. ‘‘To move from being product-centered to being customer-focused is seismic, not insignificant,’’ AT&T president John Walter told USA Today. ‘‘Every aspect of what we are doing is about the customer. That is a total reversal in our procedures and our strategic intent.’’
In order to heighten consumers’ perceptions of AT&T as a brand, the commercials took what Burke Stinson, district manager of media relations at AT&T, called ‘‘an old-fashioned approach.’’ He explained, ‘‘The approach was cinematic rather than commercial. The AT&T products on display are incidental to the central theme of people communicating.’’ Each spot featured an emotional glimpse of life in the high-tech 1990s. Ted Bell, worldwide creative director at Young & Rubicam, told USA Today, ‘‘AT&T is not just a phone company. It’s selling a lot of sophisticated high-tech services, and that can sometimes scare people. One of the best ways to offset the fear is to focus on the emotional needs that can be met by using AT&T’s products.’’
The corporate branding account helmed by Young & Rubicam—one among numerous AT&T advertising assignments—was allotted $53.3 million of AT&T’s nearly $1 billion total marketing budget in 1997. That year’s spots included ‘‘Teen Date,’’ in which a teenage girl came home from a date and continued her budding flirtations with the boy online. Another spot, ‘‘Beaches,’’ depicted a working mother whose young daughters convinced her to play hooky from work and take them to the beach, where she was able to take an important conference call using her cellular phone. In a spot titled ‘‘Rocket Man’’ a husband traveling on business faxed his wife from the airplane, asking her to be on the porch to take his call that night. Each of the commercials featured classic pop or country songs that appealed to baby boomers’ nostalgia. National print ads used the same tagline and similar imagery.
The same spots continued to run in 1998 and were supplemented by new ones, including a Super Bowl commercial that showed teenagers gossiping—via fax, E-mail, pager, and other new technologies—about a romance that was developing among their ranks. The most striking of the 1998 spots, however, had actually been filmed and slated to run in the campaign’s first year. Set to the Crosby, Stills, and Nash song ‘‘Long Time Gone,’’ the commercial recounted a young soldier’s trip to contemporary Vietnam, where his father had fought a generation earlier. The journey’s emotional resonance reached its dramatic peak when the son, using an AT&T calling card, phoned his father in America to tell him where he was. AT&T executives, fearful of offending people still sensitive to the unresolved issues surrounding the Vietnam War, had withheld their approval to run the spot for nearly a year before yielding to the pleas of Crosby, Stills, and Nash’s David Crosby and Young & Rubicam’s chairman and chief executive Edward H. Vick (a highly decorated Vietnam veteran), both of whom felt passionate about the spot. The budget for the campaign’s second year was $44.6 million.

In a field of telecommunications commercials that virtually shouted about low prices, AT&T’s commercials were a welcome change to many television viewers. In recent years telecommunications advertising had become something that consumers endured rather than enjoyed. The AT&T campaign proved to be an exception. In fact, advertising critic Dottie Enrico of USA Today reported that ‘‘AT&T’s latest corporate ad campaign has achieved the near-impossible in the telecommunications industry.’’ She explained that almost one-third of the consumers questioned in an Ad Track poll conducted by the newspaper said that they liked the AT&T ‘‘All Within Your Reach’’ campaign. The ads were especially popular with women—41 percent of women and 19 percent of men said they liked the ads very much—and with consumers in the 18 to 24 age bracket—almost 40 percent said the campaign was effective, versus 24 percent of those polled in the 30 to 39 age range.
Advertising aficionados found plenty to like about the commercials, too. The campaign won a Gold EFFIE Award for its effectiveness in the category of corporate reputation, image, and identity. ‘‘Teen Date’’ was singled out by Adweek as one of the 50 best spots of the year. ‘‘Beaches’’ was a finalist for an International ANDY Award. In the American Advertising Awards (ADDYs) national competition, AT&T received an ADDY for the ‘‘Beaches,’’ ‘‘Rocket Man,’’ and ‘‘Teen Date’’ trio and also received citations for two individual commercials. At the District 2 ADDY Awards, AT&T took home three awards. A spot called ‘‘Father and Son’’ was a finalist in the prestigious One Show. At the New York Festival’s International Television Advertising Competition, the campaign won Best of Show and Best Campaign for Telecommunications. At the same festival AT&T took home a silver for print executions of the campaign. Despite these successes, 1999 saw AT&T virtually abandon the branding strategy introduced with ‘‘It’s All Within Your Reach.’’ The company’s corporate-image advertising expenditures were slashed, accounting for a mere $8.9 million of its overall marketing budget that year. Although the ‘‘It’s All Within Your Reach’’ tagline remained in place through 2000, AT&T focused its marketing resources on individual business segments as it continued searching for ways to update its overall brand. The most prominent AT&T campaigns in these years included one in which the actor Paul Reiser touted the company’s long-distance rates and one in which the actor David Arquette pitched the dial-around service 1-800-CALL-ATT. A critical May 2000 report issued by the Boston market-research firm Yankee Group, titled ‘‘AT&T in the Brave New World of the Internet: A Brand Out of Time,’’ suggested that AT&T had failed to create a consistent brand image and risked becoming irrelevant in the Internet age.

1 comment:

Nicholas said...

Bali Sunset - quite good description/ case study but some but some important missing info.
Stephen Graham
VP Marketing Communications Worldwide
1996 -2000