Throughout last year, marketers for wireless carriers geared up for the Big Event: the day in November when subscribers could switch carriers and keep the same phone number. Ultimately, local number portability didn't cause the massive churn many expected, but experts still expect 30 million people to switch carriers this year, which means stiff competition for subscribers and even more ad spend.
Market leader Verizon Wireless—which spent $209 million in prime-time network advertising last year (per Nielsen Monitor Plus)—has already upped the ante in 2004, aligning itself with the NBC hit The Apprentice. A McCann Erickson TV spot features The Donald reprising his Apprentice host role, making the phrase "you minute-hoarding clock watcher" almost as ubiquitous as "You're fired!"
Verizon's competitors can only hope for such a knockout. Alignment with TV, entertainment, music and sports is a must for cellular growth, say analysts, because as customer acquisition growth slows, the all-important youth market can be served in those categories. Look for carriers to chase the 10-19 age group with a variety of promotions in the coming months.
One landscape-changing wireless development is Cingular's recent acquisition of AT&T Wireless for $41 billion in cash. Once completed, the merger will give Cingular about 8 million more subscribers than Verizon Wireless.
In the meantime, AT&T will likely increase its ad spend for all the wrong reasons, said Roger Entner, director of wireless/mobile services for the Yankee Group, Boston. "They are under a lot of pressure because they're losing a significant number of customers, and they don't want to be seen as hemorrhaging subscribers, so they have to be very aggressive on the customer acquisition side," says Entner, who added that Verizon might have something to worry about in 2005 when a Cingular/AT&T combined ad spend will kick in.
As for the rest of tech, after a gloomy stretch a sense of cautious optimism reigns. While Microsoft seems stuck in low gear (see box), other companies are capitalizing on the convergence of the PC and consumer electronics devices. The big winner there is Apple Computer, whose iPods have delivered record earnings. Apple spent more than $25 million in prime time last year (per Nielsen Monitor-Plus), much of it on the eye-catching iPod spots. Expect more spend from Apple and its many MP3 handheld competitors through 2004.
Speaking of desktops and laptops, both have seen increased sales in 2004, with Dell taking the lead in worldwide PC sales from HP. Despite just an 8 percent increase in media spend from 2002 to 2003 (per TNS/CMR), the wizards from Round Rock showed double-digit growth in all of its divisions. Dell should spend more this year touting new gear like handhelds and printers.
Two other tech stalwarts, HP and Intel, will continue their $300 million campaigns that rolled out last year. According to HP, its new "Change + HP" effort is the largest ever campaign targeted at business customers. Meanwhile, analysts agree that Intel's Centrino campaign has given Wi-Fi a big shot in the arm.
It's the kind of shot that all of tech could use.—Scott Van Camp
Scott Van Camp is senior editor at Brandweek.
Is Microsoft stuck in a rut? That's what much of the business press has been saying lately. With a $279 billion market cap, the Redmond, Wash.-based company will not go bust any time soon, but it has lost some luster thanks to the growing threat of the Linux operating system, an antitrust fight with the European Union and, important to the marketing side, delays of a new operating system.
Microsoft hasn't had a blockbuster product launch since Windows XP debuted in 2001. Its successor, called Longhorn, should have been out by now, but thanks to well-publicized technical glitches, is now expected to debut in 2006. By no means has Microsoft's advertising machine ground to a halt. Last year the company spent $456 million on media, an increase of 49 percent over 2002, per TNS/CMR. However, no big campaigns are expected until the end of the year, says Matt Rosoff, analyst at research firm Directions on Microsoft in Kirkland, Wash, when the company will launch an effort touting Windows XP as a digital media and home entertainment enhancement. It's important that Microsoft keeps sales of Windows XP rolling while waiting for Longhorn's release. "Most consumers are still on Windows 9.x," says Rosoff. "So they want to grow that market in a major way."
Microsoft will also get into the convergence mode near the holidays, says Rosoff, with a tie-in between the MSN Music Store—to launch later this year—and Microsoft's new Portable Media Center devices. —SVC