AT&T Inc., formed by SBC Communications' purchase of AT&T Corp., said on Thursday it is planning the biggest ad campaign in the history of either company in a bid to convince customers to stay as competition heats up from cable television rivals.
AT&T spent about $20 million for advertising in the first nine months of this year and SBC spent roughly $255 million for the same period, according to data from TNS Media Intelligence, which tracks print, television, Internet and outdoor advertising.
The national campaign, which uses the slogan "Your world. Delivered," is expected to run in the hundreds of millions of dollars and is the first since the new AT&T was formed last month.
The campaign comes as many consumers ditch home phones for mobile phones, cable operators offer phone service, phone companies offer TV services, and Verizon Communications is expected to close its purchase of AT&T rival MCI Inc.
Jeff Kagan, an independent industry analyst, said the ads would be critical for AT&T to compete with cable operators, which already sell telephone services. Phone companies are at much earlier stages in developing TV offerings.
"The company is trying to outline the new competitive battle that's coming and that they're going to be a big competitor," said Kagan. "Over the course of the next couple of years we won't be doing business with both the cable company and the telephone company any more."
Kagan expects AT&T and its peers to spend more than ever on advertising in coming years as they try to hold on to their turf and explain their position in the changing industry to consumers and investors.
While AT&T did not reveal the cost of the ads, Kagan estimated that AT&T is spending hundreds of millions of dollars on this campaign.
AT&T, which will debut the ads on TV on New Year's Eve, said it will spend more on this campaign than AT&T's or SBC's past annual advertising budgets.
By comparison, Verizon's advertising bill came to about $247 million for the first nine months of 2005 and No. 1 U.S. cable firm Comcast Corp. spent almost $220 million, according to TNS.
The campaign, which includes sponsorship of the U.S. Olympic team for the winter and summer Olympics, will explain how the SBC brand will be surpassed by the AT&T name and will also serve as an umbrella for the company's marketing of new products and services in the coming weeks, the company said.
It developed the campaign with two advertising agencies, GSD&M, an Austin, Texas, firm owned by Omnicom Group Inc., and Rodgers Townsend of St. Louis.
After prices for long-distance calls plummeted in recent years, long-distance service provider AT&T turned its marketing focus away from consumers and toward more lucrative business clients.
Executives said that while this campaign was more focused on consumers than both companies' past efforts, they have yet to determine if they will again promote AT&T's long distance services to consumers outside the SBC region.
The ads in this campaign will not refer to Cingular Wireless, AT&T's mobile venture with BellSouth Corp., but executives said they would continue to market residential wireless services under the Cingular brand.
"The objective of this was to show that these two brands (SBC and AT&T) were coming together rather than bringing another into the mix," AT&T advertising executive Shelley Almager said in a telephone interview.
AT&T plans to use its own brand and the Cingular network to sell wireless services to business clients.