Smarting from share losses, AT&T hopes its new campaign to young adults will position it as a high-tech innovation leader

AT&T never used to worry about what age its customers were, as long as they were old enough to hold a telephone. But since deregulation, competitors have been pecking away steadily at its core long-distance market – particularly among young adults. To young Americans, Ma Bell, “the phone company” to anyone older than 40, is just one of the phone companies.

In interviews, AT&T executives are beginning to acknowledge that they have a problem. And they confirm that they are well into developing a new campaign that they hope will change the market’s perceptions. “Suffice it to say, we know we are more vulnerable to folks under 40, and we are working hard to change that,” says Linda Urben, the phone giant’s U.S. corporate advertising manager.

The immediate goal is “to position AT&T as more of an interesting company to younger people,” Urben says. But it won’t stop there. Expanding on reports that surfaced last month [“AT&T Sets Out to Change Its Look,” AMW, May 251, AT&T executives say they expect the effort to form a platform that will position the company as a technology innovator. The campaign, set to break early next year, will start on the corporate level. it then will be extended to other business units.

It’s a classic marketing problem. The company must attract younger consumers without alienating its current base. And as one of the biggest spenders in the ad industry – estimated 1991 expenditures: $391 million – AT&T’s success or failure will take place in the media spotlight.

Other companies have gone down that road before, with mixed results. Oldsmobile’s “This is not your father’s Oldsmobile” campaign, for example, paraded baby-boomer idols from Ringo Starr to “Mr. Spock” in hopes of creating a hipper image for itself. The campaign failed to hook boomers, and made older consumers feel Olds wasn’t interested in them anymore. On the other hand, Gillette’s high-tech Sensor razor succeeded at broadening Gillette’s cachet.

For AT&T, the stakes are particularly high. In 1991 AT&T had $63 billion in revenues and $522 million in earnings. The company’s long-distance services account for the majority of both its revenues and profits.

But since the breakup of AT&T’S monopoly on the phone industry, the company’s long-distance share has been steadily falling. In 1984, at the time of divestiture, it was more than 90%. By 1991 it had slipped to 63%. That’s not peanuts. A share point in the long-distance market is worth a half-billion dollars.

A legion of feisty new competitors, led by MCI and U.S. Sprint, have made hay by exploiting AT&T’S “establishment” reputation.

“Yuppies were always more in tune with MCI and Sprint, and AT&T’S establishment image made it a hell of a lot easier for them to make inroads,” says an agency executive who has worked on both Sprint and MCI. “We always made sure to prop up the advertising with young faces. That appeal to youth affected the tone of our messages, the order in which we presented our ideas and the selection of which areas we wanted to attack first. And it had a lot to do with how Sprint was originally positioned as a technology leader.”

Through it all, AT&T had one ace in its hand. While the company was a frequent target of derision as “the telephone company,” it nonetheless enjoyed an enviable reputation for stability and quality.

Re-establishing that franchise across all ages is the new challenge. It’s a mission that can benefit the company in segments far beyond long distance. The company wants to be a name in computers as well.

AT&T executives are reluctant to call the campaign a repositioning. instead, they prefer to call it a “readjustment,” an extension or even “a redistribution of media weight.”

Jim Speros, brand management director, insists there will be no wholesale changes in positioning. “We’re not trying to reshape our image, we’re trying to enhance and extend our brand,” he says.

“I wouldn’t say we are getting killed in that younger segment,” says Bob Watson, director of advertising services. “Even older people may not see us as being as swiftmoving or energetic as MCI. We need to change that.”

Technological innovation will be the foundation of the new campaign. Despite having given birth to watershed inventions such as the transistor, the laser and the communications satellite, AT&T is still best known as a provider of POTS, or “plain old telephone service.”

“Younger people want to experiment more, try new things and use the latest gadget,” says Urben.

A higher-tech image would also allow the company to make a splash in markets like computers, where it is desperate to establish AT&T as a household name after billions in losses and last year’s $7.4 billion acquisition of NCR Corp.

“The key thrust is positioning the AT&T brand as an innovative computer and communications company,” says Urben. “That is a lot different image then people thought of us in the past or maybe still think of us.”

The first inklings of the upcoming campaign came in late May when AT&T marketers held meetings with media sales executives to ask for customized rate packages.

“We are waiting for those people to come back to us with proposals that aren’t off-the-shelf stuff,” says Speros. No budget has been set, and gauging the size of next year’s campaign is difficult. AT&T’s last corporate campaign, from NW Ayer in 1990, cost between $25 million and $30 million. Despite the work that has already been done, Watson claims there are no guarantees that the company will approve funding. in recent years AT&T’s ad budget has whip-sawed from $353.9 million in 1989 to $505.4 million in 1990 and back to $391.7 million in 1991.

Nonetheless, work on the nascent campaign continues, with Ayer testing concepts based on the research that showed AT&T’s deficiencies among the under-40 set. Urben says no creative work has been completed.

Brand identity experts say AT&T’s problem may be comparable to Henry Ford telling car buyers that they could have any color car they wanted, as long as it was black. Before launching its overwhelmingly successful Universal credit card, it defined four characteristics as “core attributes” of any product that carries the AT&T logo: quality, value, reliability and innovation. While those values translated well in its mushrooming credit-card business, note that style was not included. That has produced consumer products like AT&T’s cordless phones, which have sound quality indistinguishable from a corded phone, but only come in one color – white.

“I would say they do need to take a bigger view as far as broadening the meaning of the brand,” says Anita Hersh, president of Lister Butler, a New York corporate identity firm that helped AT&T launch its credit card. “They’ve got outstanding brand equity, but they’ve got to get their brand name more prominently into the high-tech area.”

Abroad, AT&T is Just a Name

While Ma Bell gets a face-lift, she’s also trying to appear more cosmopolitan. AT&T enjoys near-universal recognition as America’s top telecommunications brand, but it’s not a familiar logo outside the U.S.

“Abroad, they are just another name,” says Nicholas Hayek, whose TMH Corp. markets Swatch, Longines, Tissot and other Swiss watch brands in the U.S. Swatch plans to enter the telecommunications market with a yet-unnamed product later this year.

All of the world’s largest telecom companies have been trying to develop their international businesses in recent years because of increasing competition and contracting domestic markets for their services. “There is relentless pressure to have that global image,” says Marty Morell, a principal at Network Dynamics, a New York consultancy specializing in international telecommunications.

AT&T has chosen to hop on the bandwagon, launching a corporate print campaign in March that has been running in Mexico, Canada and assorted Asian and European markets.

“We are trying to lay the groundwork to show what kind of company AT&T is and how we can help people solve their information, computer and communications needs,” says Bob Watson, director of advertising services. “The need for an international brand at this time is a serious one – everybody up to the top officers of the company feels that way.”

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