Daily Insights
Verizon vs. AT&T: Blistering Battle Raging Over Map
Coverage Fight Is Good News for Shops, Media as Wireless Giants Square Off
By Rita Chang and Rupal Parekh
Published: November 30, 2009
SAN FRANCISCO (AdAge.com) — There hasn’t been much good news for BBDO and McCann this year, the No. 1 and 2 U.S. agencies having suffered even more than some of their peers, in part because of their exposure to troubled automakers Chrysler and GM. But the year is ending with a little boom for both as they find themselves at the center of a big-bucks marketing battle that’s already threatening to make the cola wars look like child’s play.
AT&T spots star Luke Wilson as a likable everyman refuting Verizon’s claims.
The combatants this time around — in case you hadn’t noticed — are Verizon Wireless and AT&T, the respective No. 1 and No. 2 U.S. wireless carriers. That’s the nation’s second-largest advertiser (Verizon’s marketing war chest is $3.7 billion), up against the third largest (AT&T spent $3.1 billion last year according to the Ad Age Datacenter). Those budgets dwarf Coca-Cola’s $752 million or even PepsiCo’s $1.3 billion.
Though this year has seen a huge uptick in attack campaigns from the likes of Domino’s, Campbell Soup and more, the fresh feud between two of the country’s biggest carriers comes with ferocity unmatched by those others. The drama has drawn continuous coverage in tech blogs, and now with heavyweight Apple in the mix (the company last week joined the ad fray, going to bat for its iPhone-exclusive carrier AT&T) the passionate audience weighing in from the sidelines will likely grow.
Based on a search for “AT&T” and “map” on Twendz, which measures real-time sentiment on Twitter, on the afternoon of Nov. 24, 43% of the conversations were neutral, 41% were negative and 16% were positive. “Verizon” and “map” generated conversations that were 39% negative, 39% neutral and 23% positive. According to Oneriot, posts about the Verizon-AT&T duel were shared hundreds of times; entries about Apple’s new ads supporting AT&T on a popular outlet such as Mashable were shared more than 3,300 times.
“While people may prefer one brand of soup or drink to another, there’s a lot more at stake with mobile carriers,” said Jeremy Toeman, a partner at marketing consultancy Stage Two Consulting. “In general, few people seem truly pleased with their carriers … [and] when consumers are seeing the carriers attack each other, there’s enough to get them to rally at a personal level.”
As the players bet their future on upselling data services, the promise of bigger and faster networks will come to mean something. Aggregated data-service revenues for U.S. carriers grew 27% last quarter from a year ago, with Verizon and AT&T accounting for 80% of the increase, according to Chetan Sharma. Next year, Chetan Sharma expects 2010 data revenue to rise 20% and voice to decline 10% from this year’s levels. And as the industry transitions to data from voice, carriers must make sure they squeeze out enough returns to enable them to fund the billions of dollars required to upgrade their networks and ramp up 3G coverage.
Market share counts too, and thanks to the iPhone, AT&T has kept Verizon within sight, with a 29% share that’s three percentage points behind the leader. Verizon is adding new customers at a slower clip than its rival, netting just over a million new-contract subscribers last quarter, compared to AT&T’s 1.4 million.
Churn has climbed steadily at Verizon as customers leave the carrier for AT&T’s iPhone. Among contract customers, Verizon’s churn was 1.13% last quarter, compared with 1.08% a year ago. AT&T has seen its churn drop to 1.17% from 1.22% from the year-ago period.
Verizon picked the right fight as the industry’s biggest selling season gets under way. More than any other carrier, it has made network reliability the cornerstone of its value proposition, and after all the bashing AT&T has taken for its strained network, Verizon appears to have successfully seized the opportunity to make network quality — as opposed to handsets — a competitive advantage.
Both sides are firing out ads at a rapid clip, and, according to people familiar with the carriers’ plans, more are in the offing. Verizon is stamping out more humorous permutations of its 3G-coverage-map ads created by agency of record McCann Erickson (one shows the iPhone among the Island of Misfit Toys; another shows a Verizon map blocking the TV screen at a football party while the AT&T map over the same screen allows revelers to watch the action).
AT&T spots star Luke Wilson as a likable everyman refuting Verizon’s claims, and in coming spots the actor will highlight the things that its competitor doesn’t offer, such as rollover minutes. (BBDO is AT&T’s agency of record.) One of the newer installments shows Mr. Wilson tossing out postcards all over an oversize U.S. map to communicate that AT&T has coverage in all those places. AT&T is splitting the commercials into two parts; the first installment runs in the beginning of a commercial break, and the second runs at the end. The idea is to amplify AT&T’s breadth of coverage, as the map has been thickly blanketed with postcards between the two airings, to show how many Americans are covered by AT&T’s service. WPP’s MediaEdge:cia handles AT&T media.
| Verizon/AT&T at a glance
How the numbers stack up |
||
|
AT&T |
VERIZON |
|
|
81.6 MILLION |
Total subscribers |
89.0 MILLION |
|
1.17% |
Churn (contract customers) |
1.13% |
|
$15.05 |
Average data revenue per user |
$15.59 |
|
1.39 MILLION |
New net retail contract customers |
1.02 MILLION |
|
$12.4 MILLION |
Wireless-service revenue |
$13.5 MILLION |
|
$3.4 MILLION |
Wireless-operating income |
$3.5 MILLION |
|
IPHONE |
Flagship phone |
DROID |
|
$3.7 BILLION |
Annual measured media spending* |
$3.1 BILLION |
|
Unless otherwise noted, data is for third quarter 2009. |
||
Online, AT&T has blitzed NYTimes.com, the Weather Channel and other websites, naming the hundreds of cities it serves. Both its web and TV ads echo Verizon’s data-driven approach, showing it has the numbers on its side: “AT&T covers 97% of all Americans. That’s over 300 million people.” Meanwhile, Apple’s salvo is also aimed at silencing the Droid, Verizon’s new flagship smartphone, which launched to the tune of $80 million to $100 million, the biggest product rollout in its history. (McGarry Bowen handled the launch.) Already churning out near-weekly spots to attack Microsoft, Apple’s two new TV spots show an iPhone user navigating data (reading e-mail and making dinner reservations) while on a phone call. With Verizon lacking devices that support simultaneous data and talk, Apple’s spots ask: “Can your phone and your network do that?” Its agency is TBWA Media Arts Lab.
Still, experts rate Apple’s response as mild. “It’s fairly pedestrian,” said Tom Nolle, president of telecom consultancy CIMI Corp. “Apple realizes they’re going to need Verizon to be big in the U.S. … Verizon has less to lose, because they understand Apple will come to them eventually.”
Most branding experts say Verizon has the better strategy, and calling in the lawyers was not a good PR move by AT&T. “The genius of Verizon’s strategy is the insight that consumers don’t know the difference between 3G or any other coverage. All consumers know is that they aren’t happy with AT&T’s service,” said Karl Barnhart, managing partner at CoreBrand.
Moreover, Mr. Barnhart said Verizon didn’t lose any points for attacking its smaller rival; though Verizon has more subscribers, AT&T is the perceived brand leader. “This allowed Verizon to come out with its map campaign without it feeling like a bully,” he said. “In this case, because AT&T has the bigger brand, it didn’t feel like bashing. It felt like Verizon was just being honest.”
And some said AT&T should just move on and fix what’s wrong. “If AT&T had done a better job of listening and responding to what was said, they’d be more effective than any 30- second spot,” said Joseph Jaffe, who heads marketing firm Crayon. “Now, they’re spending all this time and money talking to Verizon when they should just shut up and focus on the people who count.”
How ‘Modern Warfare 2′ Vanquished ‘Harry Potter’
Activision Video-Game Blitz Pays Big With $550M Launch
by Kunur Patel
Published: November 30, 2009
DOUBLE DUTY: Activision’s first-person shooter game wasn’t marketed as such.
NEW YORK (AdAge.com) — How does a video game rack up more revenue in five days than “Harry Potter” or “Spiderman?” By going after Hollywood’s audience.
“Call of Duty: Modern Warfare 2″ might be a traditional, hardcore shooter game, but its marketing didn’t treat it as such. The result was the biggest entertainment launch ever, according to publisher Activison Blizzard. It claims “MW2″ brought in $550 million in software sales worldwide, enough to best the previous five-day global sales record holders from both the movie and gaming industries: “Harry Potter and the Half-Blood Prince” grossed $394 million in global box-office sales and “Grand Theft Auto IV” snared $500 million.
“We have managed to market the game to a wider base,” said Brad Jakeman, chief creative officer of Activision Publishing, who leads the company’s marketing efforts. “We’re starting to see what used to be a niche form of entertainment rise to challenge theatrical audiences.”
Starting in the development stage, “Call of Duty” exploited the notion that video-game graphics and narratives have become so cinematic and sophisticated that they resemble feature films. And in the end, the marketing highlighted action and adventure scenes, with the idea that fans of action flicks would be lured to the game.
“It plays like a movie,” Mr. Jakeman said, and one reviewer from the San Francisco Chronicle concurred. The game borrows “freely from movies like ‘Goldeneye’ and ‘The Rock,’” he wrote. While many video-game publishers have drastically cut back on their use of mass-market TV, Activision ran high-profile spots of game footage from Ant Farm, Los Angeles, during the NBA conference finals and Sunday NFL games to drive awareness among a larger potential audience. Mediaedge:cia handled media.
Activision didn’t ignore core gamers for the launch, however, and social media was a huge help in reaching them. It started driving buzz for the game in March using game developer Infinity Ward’s extensive presence on Twitter and YouTube — Infinity has more than 120,000 Twitter followers and 112,000 YouTube channel subscribers — to find gamers where they’re already gathering. It racked up its own 400,000 friends on Facebook, 4.8 million views of the launch trailer and countless tweets tagged #MW2.
And it emphasized the game’s multiplayer game-play, believing it would peak to social-networking audiences, Mr. Jakeman said. “A solitary activity turns into a social activity,” he said. “People can connect with friends through the video game.” On Xbox Live, the Microsoft game console’s internet-enabled network service, “MW2″ players clocked more than 5.2 million multiplayer hours on the launch day in November, and it set a one-day record for Xbox Live: 2.2 million unique gamers played “MW2″ on launch day.
Activision also tapped retail partners such as Best Buy, GameStop and Walmart to support the launch. With the Martin Agency, Walmart created TV spots and webisodes hosted on a “MW2″ page on its brand site, featuring the “Smack Talk” guys (see story, P. 4), two characters originally created for EA Sports’ “Madden ‘09″ spots. (While the game was sold out in some stores, Mr. Jakeman said that inventory shortages were not purposeful.) Though it did not do the launch ads, strategic agency TBWA/Chiat/Day, Los Angeles was integral in setting the course for the launch, said Mr. Jakeman, adding that this is only the beginning for “MW2″ marketing.
“We are challenging the industry convention of marketing that ends with the launch,” Mr. Jakeman said. “As a franchise, this is going to be something that lives for quite some time. So we intend to support that with marketing efforts that last.”
Some entertainment-industry trackers, such as Brandon Gray, president of Box Office Mojo, are skeptical of comparisons that pit the box office against video games, which have a price point at least eight times that of movie tickets — “MW2″ costs $59.99; a theater trade group’s U.S. average price of a movie ticket was $7.18 in 2008.
Activision’s half-billion sales estimates also include “Prestige” editions of the game, which retail for more than $150 and include branded night-vision goggles — Activision declined to report how much special editions account for. So, while Activision can claim greater gross sales than production studios, it doesn’t necessarily translate to larger audiences. Video games do, however, benefit from pass-along. Research from 2007 on “Call of Duty 3″ found that with only 2 million units in the market, the game had reached nearly 9 million gamers.
Unit sales aside, the very fact Activision is positioning a high-quality graphics, first-person shooter game as a wide entertainment release is a sign gaming has busted out of its pimply-teen-in-the-basement origins. And indeed, the video-game industry’s sales have rivaled Hollywood’s for years — 2004 U.S. sales of digital game items exceeded national box-office receipts.