AT&T to spend $1 billion on rebranding

Brad Feld is stunned. Me? I’d rather spend that money improving the products. See, marketers still haven’t learned. The world has changed. You can’t fool people with a Superbowl ad anymore. Well, you can a little bit, but not the way you could in the 1980s. No, our word-of-mouth networks are FAR more efficient today than they used to be. Advertising just isn’t going to have the pop it once did. What will? Product quality. It’s why I respect Jeff Bezos and the two guys who started Google and Skype and Firefox so much. They built their businesses without doing much, if any, advertising.

Comments

  1. I’ve haven’t seen their plan, so I don’t know what precisely they’re planning to spend $1B on. The budgetted items on the $1B shopping list might not be what you think they are. And they might not be being stupid.

    In regard of use of advertising, there are important distinctions to be made between *creating* new brands (like Amazon, Google, Skype and Firefox), and *maintaining* established brands (like AT&T). These distinctions aren’t always widely understood.

    The point is: advertising has almost NO role to play in new brand creation. A new brand is best *created* via word of mouth and editorial press coverage. The proper use advertising is as a weapon against competitors if you have an established brand. It’s a classic mistake for people in charge of new brands to think they should spend money on advertising.

    There is nothing intrinsically wrong with AT&T rebranding. And, having a big headline figure – like $1B – is a useful marketing tool in itself. It will give their brand lots of editorial coverage (in traditional media and blogs). That is, simply by announcing that they are spending $1B on re-branding will get lots of people talking about AT&T. Editorial coverage is much more valuable than paid advertising…

    As an example of the power of editorial coverage and re-branding, in 2002 in the UK, BT Cellnet (a mobile operator) decided to rebrand itself as O2 (subscript 2, as in the chemical formula for a molecule of oxygen). On the day of the announcement, there was huge editorial coverage of this in the press: the stories being, “What a waste of money – I can think of better ways to spend the cash” and “What a stupid name – it doesn’t mean anything”. Was this bad planning on the part of the company that they got negative press coverage? Hardly. In the space of 24 hours, they not only successfully made almost everyone in the country aware of their new name, but they also got almost everyone talking about them. That’s what’s known as a successful re-branding.

  2. I’ve haven’t seen their plan, so I don’t know what precisely they’re planning to spend $1B on. The budgetted items on the $1B shopping list might not be what you think they are. And they might not be being stupid.

    In regard of use of advertising, there are important distinctions to be made between *creating* new brands (like Amazon, Google, Skype and Firefox), and *maintaining* established brands (like AT&T). These distinctions aren’t always widely understood.

    The point is: advertising has almost NO role to play in new brand creation. A new brand is best *created* via word of mouth and editorial press coverage. The proper use advertising is as a weapon against competitors if you have an established brand. It’s a classic mistake for people in charge of new brands to think they should spend money on advertising.

    There is nothing intrinsically wrong with AT&T rebranding. And, having a big headline figure – like $1B – is a useful marketing tool in itself. It will give their brand lots of editorial coverage (in traditional media and blogs). That is, simply by announcing that they are spending $1B on re-branding will get lots of people talking about AT&T. Editorial coverage is much more valuable than paid advertising…

    As an example of the power of editorial coverage and re-branding, in 2002 in the UK, BT Cellnet (a mobile operator) decided to rebrand itself as O2 (subscript 2, as in the chemical formula for a molecule of oxygen). On the day of the announcement, there was huge editorial coverage of this in the press: the stories being, “What a waste of money – I can think of better ways to spend the cash” and “What a stupid name – it doesn’t mean anything”. Was this bad planning on the part of the company that they got negative press coverage? Hardly. In the space of 24 hours, they not only successfully made almost everyone in the country aware of their new name, but they also got almost everyone talking about them. That’s what’s known as a successful re-branding.

  3. I used to work on AT&T advertising back during the telecom wars of the ’90s and their budget was about that high then. Owning “share of voice” is expensive and rebranding requires that your message reach alot of people frequently through many channels. When you’re in a very competitive field with lots of churn (customers who can easily flip to competitors… unlike, say, Microsoft customers *grin*) you can’t rely on word of mouth or viral marketing, you have to be more aggressive.

  4. I used to work on AT&T advertising back during the telecom wars of the ’90s and their budget was about that high then. Owning “share of voice” is expensive and rebranding requires that your message reach alot of people frequently through many channels. When you’re in a very competitive field with lots of churn (customers who can easily flip to competitors… unlike, say, Microsoft customers *grin*) you can’t rely on word of mouth or viral marketing, you have to be more aggressive.

  5. “No, our word-of-mouth networks are FAR more efficient today than they used to be.”

    This works superbly, like word of mouth stopped Bush from being reelected.

  6. “No, our word-of-mouth networks are FAR more efficient today than they used to be.”

    This works superbly, like word of mouth stopped Bush from being reelected.

  7. AT&T got props though for partnering up with cingular wireless. I’d actually say that was the their smartest move, but investing on better products should be #1 priority right now.

  8. AT&T got props though for partnering up with cingular wireless. I’d actually say that was the their smartest move, but investing on better products should be #1 priority right now.

  9. for $1 billion they could give all their best customers free service or new phones for a year. they spent over $1b on “m-life” remember that?

  10. for $1 billion they could give all their best customers free service or new phones for a year. they spent over $1b on “m-life” remember that?

  11. Word of mouth works well for creating new brands. And I suspect it will play a role in AT&T’s campaign. But once you have an established brand you cannot rely solely on word of mouth to rebrand. Whether AT&T spends their money effectively has yet to be seen. But I think it’s premature to claim they just don’t get it.

  12. Word of mouth works well for creating new brands. And I suspect it will play a role in AT&T’s campaign. But once you have an established brand you cannot rely solely on word of mouth to rebrand. Whether AT&T spends their money effectively has yet to be seen. But I think it’s premature to claim they just don’t get it.

  13. with people like Scoble, Winer, et. all it becomes more and more evident that word of mouth is actually one of the better methods as opposed to tv commercials or new taglines. It won’t be too much longer before we see the marketing agencies turning to the blogosphere to try buying posts from some of the bigger names. Obviously, most of them will say no to outright post buying, but that doesn’t mean that they can’t be swayed by schwag.

  14. with people like Scoble, Winer, et. all it becomes more and more evident that word of mouth is actually one of the better methods as opposed to tv commercials or new taglines. It won’t be too much longer before we see the marketing agencies turning to the blogosphere to try buying posts from some of the bigger names. Obviously, most of them will say no to outright post buying, but that doesn’t mean that they can’t be swayed by schwag.

  15. I agree with you 99%. But I’d like to add that, since the AT&T “Death Star” logo is going out with the bathwater, part of that $1BN will be going toward a new one. And logos and corporate ID are surely something even Google, Skype, and Amazon had to spring for at one point (although it’s clear that Google didn’t spend much– when will they finally kill the hideous drop shadow?)

    Good logos and ID are definitely still worth money.

  16. I agree with you 99%. But I’d like to add that, since the AT&T “Death Star” logo is going out with the bathwater, part of that $1BN will be going toward a new one. And logos and corporate ID are surely something even Google, Skype, and Amazon had to spring for at one point (although it’s clear that Google didn’t spend much– when will they finally kill the hideous drop shadow?)

    Good logos and ID are definitely still worth money.

  17. This is just a continuation of Southwestern Bell, aka SBC’s decades old policy of taking customers’ money and not giving them service. Back in the 60s and 70s they bought foreign phone companies instead of repairing their cables and lines.

    This is NOT a respected company. Those of us who’ve been forced to do business with them for decades see that though their name changes, their attitudes and actions don’t. It’s always the same old shit, over and over ad infinitum.

  18. This is just a continuation of Southwestern Bell, aka SBC’s decades old policy of taking customers’ money and not giving them service. Back in the 60s and 70s they bought foreign phone companies instead of repairing their cables and lines.

    This is NOT a respected company. Those of us who’ve been forced to do business with them for decades see that though their name changes, their attitudes and actions don’t. It’s always the same old shit, over and over ad infinitum.

  19. Sweeping generalization on the power of ‘word of mouth’ does little to advance the craft of marketing. While WOM may be useful in product and service areas where the vast majority of customers are low on knowledge, and fearful of purchase error, such as computing, WOM is hugely valuable.
    But move into High Volume Packaged Goods, Fast Food et al and WOM is of limited value. It may be some time time before bloggs are discussing the merits of laundry powders, and reaching millions of people.
    And lets get a grip here about blogging, the most optimistic estimates put much less than 10% of internet users involved with blogging.
    Blogging may have its day on influencing purchase or usuage decisions for the masses, but it is not this day.

  20. Sweeping generalization on the power of ‘word of mouth’ does little to advance the craft of marketing. While WOM may be useful in product and service areas where the vast majority of customers are low on knowledge, and fearful of purchase error, such as computing, WOM is hugely valuable.
    But move into High Volume Packaged Goods, Fast Food et al and WOM is of limited value. It may be some time time before bloggs are discussing the merits of laundry powders, and reaching millions of people.
    And lets get a grip here about blogging, the most optimistic estimates put much less than 10% of internet users involved with blogging.
    Blogging may have its day on influencing purchase or usuage decisions for the masses, but it is not this day.

  21. They should just shut up and eat their own horse shit.

    Verizon has been promising and delivering fiber to the home for well over a year now.

    SBC… cough AT&T, when are you going to start rolling out your U-Verse brand?

  22. They should just shut up and eat their own horse shit.

    Verizon has been promising and delivering fiber to the home for well over a year now.

    SBC… cough AT&T, when are you going to start rolling out your U-Verse brand?

  23. Rebranding is to be expected. Having been a second line at SBC when it acquired Ameritech, it seems to me that the rebranding is a smart business decison!

    It seems to me that the rebranding effort is likely to try to build one company in the minds of employees, customers, suppliers, and shareholders.

    Here are some of the reasons that rebranding seems like a good idea to me:

    Publicity. Publicity, good or bad, is always good to keep one on the customer’s mind.

    Familiarity. Many customers in the US are accustomed to seeing SBC’s name and logo. SBC is a known entity for them. People may be less familiar with AT&T and what the company stands for.

    New Image. The old AT&T image could hold the new company back, unless the company shows people who the new company is.

    Connectedness and Identity. At the moment, former SBC employees are likely to be uncertain who they are because when one was hired, one joined TEAM SBC and was a member of the SBC family. That is gone, and the company needs to show them what is replacing it so that they can connect with the new company.

    Managing Competition. Most employees of the new AT&T probably do not remember the days before divestiture. They remember the competition between the firms. The rebranding can help them move beyond the competition.

    Communicating the Vision. SBC employees have been struggling to remain committed to an organization because they weren’t hearing a vision or a direction for several years.

    Rebranding helps people start to create a new culture and to help people understand how the company sees itself.

  24. Rebranding is to be expected. Having been a second line at SBC when it acquired Ameritech, it seems to me that the rebranding is a smart business decison!

    It seems to me that the rebranding effort is likely to try to build one company in the minds of employees, customers, suppliers, and shareholders.

    Here are some of the reasons that rebranding seems like a good idea to me:

    Publicity. Publicity, good or bad, is always good to keep one on the customer’s mind.

    Familiarity. Many customers in the US are accustomed to seeing SBC’s name and logo. SBC is a known entity for them. People may be less familiar with AT&T and what the company stands for.

    New Image. The old AT&T image could hold the new company back, unless the company shows people who the new company is.

    Connectedness and Identity. At the moment, former SBC employees are likely to be uncertain who they are because when one was hired, one joined TEAM SBC and was a member of the SBC family. That is gone, and the company needs to show them what is replacing it so that they can connect with the new company.

    Managing Competition. Most employees of the new AT&T probably do not remember the days before divestiture. They remember the competition between the firms. The rebranding can help them move beyond the competition.

    Communicating the Vision. SBC employees have been struggling to remain committed to an organization because they weren’t hearing a vision or a direction for several years.

    Rebranding helps people start to create a new culture and to help people understand how the company sees itself.

  25. I don’t understand. MS’s marketing budgets are among the biggest in the world. They revolitionized software basically by marketing it out of the engineering and geek’s ghetto. And, really, the bundling strategy was your biggest innovation and selling point for years, and that is basically a marketing and sales tool.

    So, no, word of mouth isn’t challenging marketing anymore than it ever has. Which is why you’re paid for blogging. You’re marketing yourself. If word of mouth really works, you’d be out of a job, right?

  26. I don’t understand. MS’s marketing budgets are among the biggest in the world. They revolitionized software basically by marketing it out of the engineering and geek’s ghetto. And, really, the bundling strategy was your biggest innovation and selling point for years, and that is basically a marketing and sales tool.

    So, no, word of mouth isn’t challenging marketing anymore than it ever has. Which is why you’re paid for blogging. You’re marketing yourself. If word of mouth really works, you’d be out of a job, right?

  27. Here is some infor abt the spending plans of AT&T…

    In a bid to re-energize one of the country’s best-known brands, the new AT&T Inc. plans to kick off a massive ad campaign on New Year’s Eve.
    The campaign, which includes television commercials, billboards, airport signs and a theme song by the rock band Oasis, comes a month after SBC Communications Inc. acquired AT&T Corp. and decided to keep the historic phone company’s moniker. Executives said the new campaign is bigger than any marketing buys in the history of both SBC and the old AT&T.
    AT&T won’t say how much it is spending on the campaign, which is being handled by Omnicom Group Inc.’s GSD&M and Rodgers Townsend. Advertising experts estimate it will cost $800 million to $1 billion.
    The campaign begins on New Year’s Eve in New York City’s Times Square, with ads on a digital billboard, notices covering nearly the entire sides of buildings and other signs that can be seen as the ball drops at midnight. The first television ad will run during ABC-TV’s live telecast of “Dick Clark’s New Year’s Rockin’ Eve 2006.”
    “This campaign is going to introduce the new AT&T to a whole new generation of customers,” said Karen Jennings, AT&T’s senior executive vice president for human resources and communications. “It’s going to be hard to miss.”
    Combined, AT&T and SBC spent more than $2.2 billion on U.S. media in 2004, according to TNS Media Intelligence. In 2000, Verizon Communications Inc. spent about $500 million on rebranding, after it was formed by combining Bell Atlantic Corp., GTE Corp and Nynex Corp.
    Brand awareness of AT&T is high — as much as 98% among consumers and almost 100% for businesses. Executives hope to jazz up the brand after the old AT&T’s stock sank during recent years, amid competition from long-distance rivals.
    “We had one chance to really do it right, to reintroduce and rejuvenate this iconic brand, so our focus was very clear,” said Roy Spence, president and founding partner of GSD&M.
    AT&T executives say the campaign aims to retain existing customers and emphasize the benefits of the two companies joining forces. For the most part, the ads will appear in the U.S. The company says an international campaign is under development.
    While the old AT&T was famous for a campaign that said “Reach out and touch someone,” the new company’s tag line, “Your world, delivered,” will focus on its role as not only a phone company but also an Internet provider. For example, one billboard will feature the Earth viewed from space, juxtaposed with images of people communicating around the world. It will say “Blogging, delivered,” in reference to Web logs.
    The TV ads will run on more than 30 cable networks during prime-time programming and bowl games. Some will feature the Oasis song, “All Around the World,” and two of the TV ads are tailored to run in the former SBC’s markets for residential customers. Print ads will appear in national newspapers as well as more than 100 regional papers and on Web sites.

    Now everyone knows what it means and why such great minds occupying such respectable posts are going for WASTING money on advtising.

    Ritika Symbiosis Instiute of Telecom Management,
    Pune India

  28. Here is some infor abt the spending plans of AT&T…

    In a bid to re-energize one of the country’s best-known brands, the new AT&T Inc. plans to kick off a massive ad campaign on New Year’s Eve.
    The campaign, which includes television commercials, billboards, airport signs and a theme song by the rock band Oasis, comes a month after SBC Communications Inc. acquired AT&T Corp. and decided to keep the historic phone company’s moniker. Executives said the new campaign is bigger than any marketing buys in the history of both SBC and the old AT&T.
    AT&T won’t say how much it is spending on the campaign, which is being handled by Omnicom Group Inc.’s GSD&M and Rodgers Townsend. Advertising experts estimate it will cost $800 million to $1 billion.
    The campaign begins on New Year’s Eve in New York City’s Times Square, with ads on a digital billboard, notices covering nearly the entire sides of buildings and other signs that can be seen as the ball drops at midnight. The first television ad will run during ABC-TV’s live telecast of “Dick Clark’s New Year’s Rockin’ Eve 2006.”
    “This campaign is going to introduce the new AT&T to a whole new generation of customers,” said Karen Jennings, AT&T’s senior executive vice president for human resources and communications. “It’s going to be hard to miss.”
    Combined, AT&T and SBC spent more than $2.2 billion on U.S. media in 2004, according to TNS Media Intelligence. In 2000, Verizon Communications Inc. spent about $500 million on rebranding, after it was formed by combining Bell Atlantic Corp., GTE Corp and Nynex Corp.
    Brand awareness of AT&T is high — as much as 98% among consumers and almost 100% for businesses. Executives hope to jazz up the brand after the old AT&T’s stock sank during recent years, amid competition from long-distance rivals.
    “We had one chance to really do it right, to reintroduce and rejuvenate this iconic brand, so our focus was very clear,” said Roy Spence, president and founding partner of GSD&M.
    AT&T executives say the campaign aims to retain existing customers and emphasize the benefits of the two companies joining forces. For the most part, the ads will appear in the U.S. The company says an international campaign is under development.
    While the old AT&T was famous for a campaign that said “Reach out and touch someone,” the new company’s tag line, “Your world, delivered,” will focus on its role as not only a phone company but also an Internet provider. For example, one billboard will feature the Earth viewed from space, juxtaposed with images of people communicating around the world. It will say “Blogging, delivered,” in reference to Web logs.
    The TV ads will run on more than 30 cable networks during prime-time programming and bowl games. Some will feature the Oasis song, “All Around the World,” and two of the TV ads are tailored to run in the former SBC’s markets for residential customers. Print ads will appear in national newspapers as well as more than 100 regional papers and on Web sites.

    Now everyone knows what it means and why such great minds occupying such respectable posts are going for WASTING money on advtising.

    Ritika Symbiosis Instiute of Telecom Management,
    Pune India

  29. AT&T sued over NSA spy program

    AT&T has been named a defendant in a class action lawsuit that claims the telecommunications company illegally cooperated with the National Security Agency’s secret eavesdropping program.

    http://news.com.com/AT38T+sued+over+NSA+spy+program/2100-1028_3-6033501.html

    Is it possible that lawsuits and, more importantly, their image, will cost them much more than a mere re-branding?

    AT&T: Can you hear me now?

    NSA: Loud ‘n clear!

  30. AT&T sued over NSA spy program

    AT&T has been named a defendant in a class action lawsuit that claims the telecommunications company illegally cooperated with the National Security Agency’s secret eavesdropping program.

    http://news.com.com/AT38T+sued+over+NSA+spy+program/2100-1028_3-6033501.html

    Is it possible that lawsuits and, more importantly, their image, will cost them much more than a mere re-branding?

    AT&T: Can you hear me now?

    NSA: Loud ‘n clear!

  31. ATT, stealing another (Oasis) groups song and trying to dupe the public into another bait & switch ($69 Package bla bla bla) ends up at near $100. Then massive fees, late fees, etc thats what they ought to advertise- the truth. AVOID IT Suckers!!!!!

  32. ATT, stealing another (Oasis) groups song and trying to dupe the public into another bait & switch ($69 Package bla bla bla) ends up at near $100. Then massive fees, late fees, etc thats what they ought to advertise- the truth. AVOID IT Suckers!!!!!

  33. More inanity involving the AT&T branding brilliance, as I just ran headlong into the reality of its brand when I tried to change my service deal. This says more about what’s wrong with branding as a marketing conceit than I care to admit…well, actually, ok, I’ll admit it, and I write about it on my blog, Dim Bulb, if you care to check it out. Thanks! (http:dimbulb.typepad.com)

  34. More inanity involving the AT&T branding brilliance, as I just ran headlong into the reality of its brand when I tried to change my service deal. This says more about what’s wrong with branding as a marketing conceit than I care to admit…well, actually, ok, I’ll admit it, and I write about it on my blog, Dim Bulb, if you care to check it out. Thanks! (http:dimbulb.typepad.com)