Dialing for Dollars

Competitive cellphone market diversifies ad targets
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When it comes to phone service, Verizon Wireless's "Test Man" says it all: "Can you hear me now?" More to the point, customers—and companies—heard the FCC. Once it mandated that users could keep their mobile phone numbers after switching carriers, the ad wars escalated.

That's why major media buyers, as well as network sales execs, expect the category to account for at least $800 million of the total $15 billion in commitments made in the upfronts. (This conservative estimate excludes scatter and syndication.) The heavy hitters are the six major wireless providers: Verizon Wireless, Sprint PCS, T-Mobile, Cingular, Nextel, and AT&T, which has signed a five-year deal with Sprint to sell wireless service over Sprint's network.

Major cellphone companies dialed up $2.6 billion in total adspending for 2002, with an estimated $900 million for broadcast, $950 million for cable. In 2003, total ad spending was $4.4 billion: $1.1 billion for broadcast, $1.3 billion for cable. This year, subtle shifts in targeting should heighten ad spending, say media buyers who handle cellphone companies.

Which medium is best-positioned to reap 2004 monies?

Cable, says Brad Adgate, senior vice president and director of research for Horizon Media, since software providers tilt toward the 18-34 market. The industry's continuing growth in audience share, coupled with its ability to narrowly target consumers, is a boon to advertisers. Shows like The Shield
and Nip/Tuck
are popular with service providers and hardware manufacturers. But such spots, says Adgate, are a small part of the broadcast universe.

"It's a very solid category for us, given our demography: young, upscale, well-educated," says Neil Baker, senior vice president for ad sales at E! Networks' Style channel. "The category has been robust. All of the major carriers are represented here. And the technology advances spur abundant opportunities for us."

One reason is broader focus.

In the past, cellphone companies have largely concentrated on the business class and younger demos. Not anymore.

"We buy media based on a variety of demographics," says Verizon Wireless rep Brenda Raney. "MTV spots will be different from the ones on 60 Minutes. Prime time is obviously key, though we are selective about the shows." Verizon's youth target is 16-24. Ads for that market will focus on the brand but also on products and services, like text messaging. "General marketing might focus on in-network calling, which positions the phone as a communications device for families."

The same widening demographic landscape is especially true for Nokia, LG, Samsung, Motorola, and other manufacturers of cellphone hardware, notes Bruce Lefkowitz, executive vice president of ad sales for Fox Cable Networks. "The younger demos are going to buy the new camera phone, the Web-enabled phone. At the other end of spectrum are the service providers. They're trying to place the focus on price, and that's aimed at an older demographic."

That's good news to Adgate. "It's a growing and enormously competitive category," he says. "Companies are forced to spend more to build brand awareness and market share. At least for the next year or two, the cellphone category will rise."

In fact, the best thing for a vendor is a category war.

"It's starting to resemble the cola wars of the 1970s," says Lefkowitz. With a difference: The advertising has avoided the rancor that infused many of Coca-Cola's and Pepsi's spots.

The cellphone companies are still trying to define what they are, says Stephen Fajen, a principal with New York-based media consultant Morgan Anderson, as opposed to what they are not.

"The ability of consumers to keep their phone numbers when they cancel one cellphone provider for another fuels the growth of that business," notes Fajen. "But the greater availability of various products and services is where the competition starts and ends."

Others believe the new, more flexible pricing plans will spark category expansion.

One sign is the deal announced May 18 by AT&T and Sprint, suggesting that competition will heat up as greater consolidation among cellphone services takes place. "You'll have a Burger King/McDonald's/Wendy's type of competitive dynamic," Adgate predicts.

But the pitch, unlike the cola vitriol, is soft-pedaled.

In its new campaign, which broke May 17, Sprint PCS's first TV spot, "Red Ball," features children in a documentary-style format that introduces the Sprint PCS Fair & Flexible Plan.

The 30-second spot, created by Publicis & Hal Riney of San Francisco, opens with a teacher talking to students who each have a new red ball. The teacher explains that, before the children can play with the ball, they must tell her how many minutes they will use the ball every month—for the next two years.

The shot pans to the kids, who look confused and disappointed as they try to calculate the minutes in their heads. Then the text on the screen reads, "How does your wireless company make you feel?" The spot ends with the new tagline: "Sprint PCS. Now, that's better."

In an increasingly cluttered environment, companies are pitching their messages in a nonconfrontational style. And networks are going to some lengths to avoid bumping spots against each other. "We do try to spread the spots out," Lefkowitz says. "We have accommodated demand," he says, "but it is becoming more crowded."

Can you still hear me?

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