Marketer Of The Year: AT&T

Our Marketer of the Year went from Bakelite to broadband in a single bound. Once regarded as a stodgy, if reliable, behemoth, American Telephone & Telegraph zipped from that old moniker to the slightly more serviceable SBC to the more current Cingular and back to AT&T, all in one nearly seamless year.

The company set for itself a daunting task: Make Internet protocol television (IPTV) and wireless services as dependable and reliable as a hard-wired dial tone. No easy feat.

AT&T burst forth with advertising and marketing campaigns that had a younger and edgier style, punched up with bright hues and catchy tunes. The hipper look borrowed orange for the primary color from AT&T Wireless, formally Cingular, though the corporate logo remained blue. The bright color was like the stamp of ambition, signaling the carrier's intention to stand out as a strong global wireless and broadband content provider, delivering not only voice, but also music, movies and television content.

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That promise, along with some smart strategic executions, paid off in 2007. Buoyed largely by the December 2006 acquisition of BellSouth, third-quarter profit climbed 41%, to $3.1 billion. Total mobile subscribers rose by 2 million, to 65.7 million. Quarterly reported revenue increased to $30.1 billion, up from $15.6 billion in the year-earlier third quarter, AT&T reported on Oct. 23. AT&T also reaped the benefits of exclusive deals to sell Apple's iPhone, Samsung's BlackJack II*, Research In Motion's Blackberry and Blackberry II, and others.

Subscriber growth held steady in 2007, buttressed by exclusive deals with handset makers. By Dec. 23*, the company had activated 1.1 million iPhones and was supporting 65.7 million mobile subscribers, as well as 126,000 U-Verse TV customers. AT&T's total subscribers reached 2.1 million in the third quarter, up from 1.9 million in the second quarter and 1.6 million in the first.

The company needs its intense commitment to cellular to offset the industry's 7% annual loss of hardwired residential telephone services, as more and more college students migrate to wireless after moving out of their parents' homes, cable companies poach more customers by launching phone services, and consumers shut off landlines when switching to broadband.

Equity research firm Sanford C. Bernstein & Co. describes AT&T as having remade itself as a wireless-first telecom, after a series of transformative mergers over the past four years. Wireless now makes up a full third - and growing - of the company's portfolio, while business from traditional landlines in the home, once the heart and soul of SBC, now accounts for a mere 22 percent of revenue.

"It's a digital world," says Wendy Clark, AT&T SVP/advertising, playing off a recent online campaign. "'Digital World' is an example of how we identified our challenge to communicate AT&T's transition."

Yet ask AT&T's Clark the biggest challenge the telecom faced last year, and she shrugs off losses in hardwired subscribers and points instead to the process of trimming a long list of marketing and ad agencies after the BellSouth and Cingular merger. "We had to make sure the best ideas didn't get left behind, and keep those that could help us work through the transition," she says.

There are plans to cut more from the 50-agency list, now whittled to 20, by examining credentials and meeting with representatives from each. None of the decisions so far have been across the board; the chosen reflect a combined list. For example, New York-based Mediaedge:cia won the business of the five agencies that supported media buys.

The company made some lower profile acquisitions, as well. One of the most strategic came in November, when it purchased Ingenio, the San Francisco-based developer of an advertising platform that combines Internet and phone technologies to track calls to businesses generated by specific ads. While financial terms were not disclosed, the deal closed in December.

AT&T expects to integrate Ingenio's technology into its directory service and local search advertising sites, including YellowPages.com, AT&T Real Yellow Pages and 1-800-Yellow Pages.

An eagerness to remain No. 1 in the United States is complemented by AT&T's plans to build out its network infrastructure internationally, a strategy spearheaded by CEO Randall Stephenson. The company spent between $700 million and $1 billion last year to expand its global IP network, launching a couple hundred initiatives to expand its overseas operations, from building on its landline phone network in Vietnam to chasing a share of India's mobile phone market.

That sort of globetrotter ambition shone through in AT&T's advertising and marketing campaigns. Take, for example, the ad campaign "Your Seamless World," which uses a mash-up of city names around the globe to illustrate that consumers live, work and play in many locations worldwide. The ad campaign aims to appeal to a variety of consumers, such as actors, architects, businesspeople, moms and students.

Seamless World and other campaigns were highly integrated, consisting of in-store, interactive and television pieces all working together to get consumers thinking in a new direction. AT&T launched an online store in October that lets customers create the names of their own connected worlds by typing in the names of cities where they work, live or play.

In recognition of the convergence between entertainment and communications, AT&T formed tighter ties with Hollywood. Last summer, the carrier revealed ongoing work with studios to help track pirated content. So, the decision later in the year to join Walt Disney Co.'s subsidiary Steamboat Ventures as an investor in Vobile, which specializes in identifying pirated movies on the Internet, didn't come as a surprise. It did, however, indicate the company had become more serious about helping to clean up piracy as AT&T continues to roll out U-verse, its digital TV and high-speed Internet service.

AT&T also inked several deals with Napster. One gave customers free, unlimited access to more than 3 million songs via Napster To Go, valid for one year. Another let consumers purchase individual songs for $2 each or buy a five-pack of tracks for $7.50.

The partnerships with Hollywood studios, eMusic, Napster and Yahoo are part of AT&T's 100-plus year transformation, says Jan Dawson, vice president at research firm Ovum.

"Music and TV services are AT&T's first push to provide the content on mobile devices," he says. "Campaigns like Digital World, along with the Blue Room Web site, are ways to get people thinking about AT&T as an online destination, rather than a means to get there."

* Editor's note: The article was amended post publication.

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