Mobile Services' Marketing Makeover

Get ready for a barrage of new messages from Sprint, Cingular, Verizon, and T-Mobile—a reflection of the rising stakes in the war for subscribers

By Olga Kharif

Of the many challenges facing Sprint Nextel Chief Executive Gary Forsee, one of the biggest is reviving his company's wireless marketing machine. In the fourth quarter, the company lost 306,000 customers, in part, analysts say, because of an ad campaign that failed to connect with users, as bigger rivals Verizon Wireless and Cingular were sharpening their marketing messages. "There's no question that Verizon and Cingular have separated themselves from the pack," says Andrew Cole, president of consultancy CSMG. "[Their ad campaigns] have been focused on the right things, like network quality."

Sprint Nextel (S) plans to get its ads focused on the right things, too. To that end, it plans "significantly increased media-related spending," the company said Jan. 8. In the first quarter, Sprint is expected to pick a new ad agency, and it's likely to scrap the "Power Up" ads that industry experts call confusing. "In the second quarter, I expect Sprint to become more aggressive with marketing," says Roger Entner, an analyst with consultancy Ovum. "This should be the year of rebound."

Sprint's not alone in revamping its marketing message. Changes are also on the way from other big wireless service providers, a reflection of the rising stakes in the increasingly competitive and saturated U.S. mobile-phone marketplace. Wireless carriers are among the biggest spenders on advertising and their budgets have been creeping up. To boost sales and to keep investors happy, providers increasingly have to pinch each other's customers.

Changing Messages More Quickly

Spending among the top four providers—Cingular, which is now AT&T (T); Verizon Wireless, owned by Verizon (VZ) and Vodafone (VOD); Sprint Nextel; and Deutsche Telekom's (DT) T-Mobile USA—reached a record $3 billion in the first nine months of 2006, according to consultancy TNS Media Intelligence. The biggest jumps came at T-Mobile, which increased spending 18%, to $384 million, and Verizon Wireless, where spending rose 14%, to $1 billion, says Jon Swallen, director of research at TNS Media Intelligence. Sprint's rose 11%, to $701 million, while Cingular's spending slipped 5%, to $873 million.

What other changes are in the cards? AT&T has said it will spend heavily in the next six months to rechristen Cingular as AT&T, spending more on this campaign than any in the history of the company, which was jointly owned by AT&T and BellSouth before the two merged at the end of 2006. T-Mobile is revamping its message too, and analysts expect Verizon to make changes to a popular but aging message that focuses on network quality. Consultancy eMarketer predicts that U.S. wireless service providers will spend $12.4 billion in 2007, up 8.5% from 2006. "When a category begins to enter a mature phase, typically the messages marketers use are subject to change more frequently," Swallen says.

T-Mobile is no stranger to change. For years, it has trumpeted the low cost of its calling plans. But in October, the carrier replaced its "Get More" tagline with "Stick Together." Instead of promoting low prices, the new message emphasizes the extras T-Mobile users will get, such as myFaves, allowing customers to call five numbers—wireline or wireless—for free as part of a calling plan. "We will be focusing on services that connect you to your network, not an impersonal network of millions," T-Mobile USA Chief Executive Robert Dotson said in October.