Wednesday
Telecommunications in the Virtual World
Telecommunications advertisers are BIG. They spend a great deal of money on a regular basis making sure we don’t forget who they are or what they have to offer.
Telecommunications businesses depend on as many people as possible knowing what products and services they have to offer and they want to be sure as many people as possible are enticed to use them.
This is no accident, of course. We are a society – a world – that relies on telecommunications products and services on a daily, hourly, and even minute-by-minute basis to maximize the flow of our lives.
Being ubiquitous, however, means you have to always be there. And to always be there means you have to always be where the people you are trying to reach are. Among those places is online.
With the telecommunications industry being a top 10 advertising category, the goings-on in telecommunications marketing affects all of us who work in this business. As an industry, its products are well suited to being promoted on the Web, a place replete with constituents of the wired and wireless nation.
The telecommunications industry has always been one driven by a unique combination of common forces: consumer needs and wants, and technological and scientific discoveries. I mean, the guys who won the Nobel Prize of Physics in 1978 -- Arno Penzias and Robert Wilson – in 1965 were trying to figure out how to eliminate static and ended up finding evidence of the Big Bang. By virtue of this unique combination of forces, they were in a position to make use of the Internet as a marketing tool early on. It should come as no surprise, then, that it has been largely agreed upon that the first true banner to run on a Website was an ad for AT&T on Hotwired back in ’95.
When we look at where telco’s spend their ad dollars, we see that although they spend a significant amount of money online compared with other advertisers, as a percentage of overall dollars, their spend is still within the range of the average (about 3% of total). Whereas the top three telecommunications advertisers spent some $2.5B in 2002 according to TNS/CMR, they spent just $82MM online. Yet only the tech category outspent them.
It seems, then, that telecommunications advertisers are still looking for something specific when they advertise online that they aren’t necessarily looking for when they are advertising in all other media.
Larry Everling, president of Grady Rose Consulting and former director of Web sales/director of online marketing at Nextel, says sales is still the focus for many telecommunications advertisers. Nextel’s online efforts have traditionally been to “drive traffic to the Website for the purpose of selling phones,” he says.
Nextel’s legacy has been mostly selling to the business provider, and getting that audience to buy online hasn’t always been easy. When it comes to trying to use the medium solely as a distribution channel, the results can be disappointing and threaten the medium’s being used for less direct response-driven objectives.
Other audiences have been targeted by telecommunications advertisers, such as the youth segment and the general consumer, but the objective has been the same.
Jeff Lanctot, vice president of Media at Avenue A, agrees that the telecommunications advertisers have primarily been looking at making sales when they make use of online advertising, but they are starting to realize there is more to online advertising than just clicking and buying.
“Branding is certainly a consideration, but ultimately advertisers recognize the ability to use online as both a channel and a medium,” Lanctot points out. “Selling wireless phones and plans online is still in its infancy, as the process is not as easy or elegant as it will be. There is also a recognition (supported by solid data) that consumers are likely to go through the wireless research process online, but purchase in a store.”
Everling thinks that use of online as an advertising vehicle should reach beyond just its use as a distribution channel.
“There are advantages to buying from other channels,” he says, such as lower costs to be found not only through terrestrial retail sources, but other online retailers like Amazon.com or Buy.com.
An advantage of online advertising for an advertiser with a more complicated pitch, like cell phone service and product providers, is that it can accomplish a lot of the heavy lifting that sales personnel have traditionally had to do, freeing them up to do more “closing.” This would be particularly valuable for the business-to-business segment.
“Why not push customers to the field, where many of the bulk sales are taking place?” muses Everling.
It is the uncertainty inherent in the process of evolving marketing methodologies that has continued to keep the online medium a cautious investment. Companies do not like to take risks, particularly with their money. So, for many, it has been a long series of tests and trials. Sometimes it has been one toe into the water and two steps back from the shore.
But significant results ultimately require significant investments, and some advertisers are making them, albeit the significance is relative.
AT&T Wireless is probably the biggest telecommunications advertiser spending money against online advertising, which is approximately 5% of total reported spending. The amount AT&T spent online in 2002 was 2.7 times more than what was spent on Outdoor and 2 1/3 times more than consumer magazines.
Still, television and newspapers dominate.
“While online is becoming a bigger part of the mix, other media such as metro newspapers still receive the bulk of the ad dollars,” says Catherine Weitnauer, the Telecommunications Category Leader at Yahoo!.
Television benefited from about 44% of spending in 2002 from the three biggest advertisers in the space, whereas over 36% of their money was spent in newspapers. This suggests local media plays a significant role and might be a harbinger for things to come for online media and these advertisers.
“[Online] represents a very small percentage of total spending -- even the most aggressive wireless advertisers are well below 10%,” says Lanctot. “However, [use of the Internet] is highly competitive and growing quickly. In terms of efficiency, it represents an opportunity to start anew. Offline, wireless companies are beholden to third-party retailers -- they pay these retailers huge incentives to sell their services. Online represents a way to get back to their customers -- and their margins.”
So, again, the share of ad dollars spent against online media will likely be driven by channel considerations, still a primary driver for a lot of advertisers online. The risk, as ever, is that the other benefits of the media will go overlooked.
But the existing attraction of the medium is what will likely contribute to its continued use by telecommunications advertisers and its wider adoption in the future. As mentioned, that attraction is the medium’s ability to serve as both a distribution channel and a messaging channel.
“Online’s unique ability to be both an advertising medium and a sales channel” is what telecommunications advertisers see as the biggest role online media has to play in contributing to their businesses, says Lanctot.
“Promotional efficiency, precise targeting and message immediacy drives sales,” says Weitnauer of Yahoo!. “It’s what led these advertisers to metro newspapers in the early days of adoption and it’s what’s increasingly bringing them online.”
Says Everling: “The traffic to the Websites is phenomenal. It is going to be a matter of time before some CFO takes a look at this and asks what are we going to get out of this? It will be a matter of time before the blind trust of handing money over to the networks is going to end.”
It’s going to take an advertiser outside of the finance or travel categories to tell us what else an advertiser’s Website does beyond just selling. And telecommunications might be where this comes from.
Telecommunications businesses depend on as many people as possible knowing what products and services they have to offer and they want to be sure as many people as possible are enticed to use them.
This is no accident, of course. We are a society – a world – that relies on telecommunications products and services on a daily, hourly, and even minute-by-minute basis to maximize the flow of our lives.
Being ubiquitous, however, means you have to always be there. And to always be there means you have to always be where the people you are trying to reach are. Among those places is online.
With the telecommunications industry being a top 10 advertising category, the goings-on in telecommunications marketing affects all of us who work in this business. As an industry, its products are well suited to being promoted on the Web, a place replete with constituents of the wired and wireless nation.
The telecommunications industry has always been one driven by a unique combination of common forces: consumer needs and wants, and technological and scientific discoveries. I mean, the guys who won the Nobel Prize of Physics in 1978 -- Arno Penzias and Robert Wilson – in 1965 were trying to figure out how to eliminate static and ended up finding evidence of the Big Bang. By virtue of this unique combination of forces, they were in a position to make use of the Internet as a marketing tool early on. It should come as no surprise, then, that it has been largely agreed upon that the first true banner to run on a Website was an ad for AT&T on Hotwired back in ’95.
When we look at where telco’s spend their ad dollars, we see that although they spend a significant amount of money online compared with other advertisers, as a percentage of overall dollars, their spend is still within the range of the average (about 3% of total). Whereas the top three telecommunications advertisers spent some $2.5B in 2002 according to TNS/CMR, they spent just $82MM online. Yet only the tech category outspent them.
It seems, then, that telecommunications advertisers are still looking for something specific when they advertise online that they aren’t necessarily looking for when they are advertising in all other media.
Larry Everling, president of Grady Rose Consulting and former director of Web sales/director of online marketing at Nextel, says sales is still the focus for many telecommunications advertisers. Nextel’s online efforts have traditionally been to “drive traffic to the Website for the purpose of selling phones,” he says.
Nextel’s legacy has been mostly selling to the business provider, and getting that audience to buy online hasn’t always been easy. When it comes to trying to use the medium solely as a distribution channel, the results can be disappointing and threaten the medium’s being used for less direct response-driven objectives.
Other audiences have been targeted by telecommunications advertisers, such as the youth segment and the general consumer, but the objective has been the same.
Jeff Lanctot, vice president of Media at Avenue A, agrees that the telecommunications advertisers have primarily been looking at making sales when they make use of online advertising, but they are starting to realize there is more to online advertising than just clicking and buying.
“Branding is certainly a consideration, but ultimately advertisers recognize the ability to use online as both a channel and a medium,” Lanctot points out. “Selling wireless phones and plans online is still in its infancy, as the process is not as easy or elegant as it will be. There is also a recognition (supported by solid data) that consumers are likely to go through the wireless research process online, but purchase in a store.”
Everling thinks that use of online as an advertising vehicle should reach beyond just its use as a distribution channel.
“There are advantages to buying from other channels,” he says, such as lower costs to be found not only through terrestrial retail sources, but other online retailers like Amazon.com or Buy.com.
An advantage of online advertising for an advertiser with a more complicated pitch, like cell phone service and product providers, is that it can accomplish a lot of the heavy lifting that sales personnel have traditionally had to do, freeing them up to do more “closing.” This would be particularly valuable for the business-to-business segment.
“Why not push customers to the field, where many of the bulk sales are taking place?” muses Everling.
It is the uncertainty inherent in the process of evolving marketing methodologies that has continued to keep the online medium a cautious investment. Companies do not like to take risks, particularly with their money. So, for many, it has been a long series of tests and trials. Sometimes it has been one toe into the water and two steps back from the shore.
But significant results ultimately require significant investments, and some advertisers are making them, albeit the significance is relative.
AT&T Wireless is probably the biggest telecommunications advertiser spending money against online advertising, which is approximately 5% of total reported spending. The amount AT&T spent online in 2002 was 2.7 times more than what was spent on Outdoor and 2 1/3 times more than consumer magazines.
Still, television and newspapers dominate.
“While online is becoming a bigger part of the mix, other media such as metro newspapers still receive the bulk of the ad dollars,” says Catherine Weitnauer, the Telecommunications Category Leader at Yahoo!.
Television benefited from about 44% of spending in 2002 from the three biggest advertisers in the space, whereas over 36% of their money was spent in newspapers. This suggests local media plays a significant role and might be a harbinger for things to come for online media and these advertisers.
“[Online] represents a very small percentage of total spending -- even the most aggressive wireless advertisers are well below 10%,” says Lanctot. “However, [use of the Internet] is highly competitive and growing quickly. In terms of efficiency, it represents an opportunity to start anew. Offline, wireless companies are beholden to third-party retailers -- they pay these retailers huge incentives to sell their services. Online represents a way to get back to their customers -- and their margins.”
So, again, the share of ad dollars spent against online media will likely be driven by channel considerations, still a primary driver for a lot of advertisers online. The risk, as ever, is that the other benefits of the media will go overlooked.
But the existing attraction of the medium is what will likely contribute to its continued use by telecommunications advertisers and its wider adoption in the future. As mentioned, that attraction is the medium’s ability to serve as both a distribution channel and a messaging channel.
“Online’s unique ability to be both an advertising medium and a sales channel” is what telecommunications advertisers see as the biggest role online media has to play in contributing to their businesses, says Lanctot.
“Promotional efficiency, precise targeting and message immediacy drives sales,” says Weitnauer of Yahoo!. “It’s what led these advertisers to metro newspapers in the early days of adoption and it’s what’s increasingly bringing them online.”
Says Everling: “The traffic to the Websites is phenomenal. It is going to be a matter of time before some CFO takes a look at this and asks what are we going to get out of this? It will be a matter of time before the blind trust of handing money over to the networks is going to end.”
It’s going to take an advertiser outside of the finance or travel categories to tell us what else an advertiser’s Website does beyond just selling. And telecommunications might be where this comes from.
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