WSJ: AT&T Multi-Platform Ad Sales No Cinch

There’s an interesting article in the WSJ (sub req’d) that discusses AT&T’s strategy to make ad sales across platforms a centerpiece of its new corporate strategy and to potentially leverage its yellow pages sales force to sell ads across those platforms. But the (rightly) skeptical article points out the challenges the telecom giant faces in a new, extremely competitive landscape:

AT&T says it has an edge over other media companies because of its ability to offer advertisers space on “three screens” — computers, TVs and mobile phones. Still, it faces plenty of hurdles. For one thing, its TV service, which serves only a few thousand customers in the 11 markets in which it’s currently available, doesn’t yet have the critical mass that advertisers look for. In contrast, AT&T’s cellphone service has 58.7 million customers, and the company serves 11.5 million high-speed Internet subscribers. AT&T executives say they don’t expect ad sales to gain momentum until next year at the earliest.

Others have “three screens” too: Google, Yahoo! (an AT&T partner) and Comcast. Online video counts as a screen, separate from the general Internet, in my mind. Certainly YouTube is as powerful as TV for users and potentially powerful as a brand advertising vehicle alternative to traditional TV.

More from the WSJ article:

The presence of Comcast and other big cable operators in the ad-sales market underlines the competitive challenge facing AT&T. “It took how long for cable to become effective at local ad sales?” asks Tom Wolzien, an independent media consultant.

“It remains to be seen whether [AT&T] can do very quickly what it has taken the other guys a long time to build,” adds Steve Calder, executive media director at Mediahub, a media-services unit of Interpublic’s Mullen agency.

It isn’t just cable operators that AT&T is going up against. The telecom titan is entering a very crowded field — one that is undergoing intense change, as marketers scale back spending on traditional media and put more emphasis on new media. Growth of spending on TV advertising has slowed dramatically in recent years, raising questions about AT&T’s ability to generate significant revenue from that area.

“Those pots of dollars are under duress,” Mr. Spangenberg says. He thinks AT&T will have a competitive advantage with its ability to package TV ads with spots on the Web and mobile devices. And he also expects AT&T to win ad dollars by making use of new interactive ad techniques, such as short four-minute films that audiences can choose to see with a click of their remote control.

In my “It’s Alive” post I said:

AT&T will have a $5.8 billion print directory business [source: Kelsey]) that employs more than 3,500 local sales people. It also owns YellowPages.com, which has the potential to be much more effective and user-friendly than it is today. And the company very recently launched 1-800-YellowPages, which could become a very competitive and effective mobile-local search service. (Cingular, soon to become AT&T wireless again, also offers mobile search, etc.) And all this content could equally be distributed via TV/IPTV too under the “YellowPages.com” brand.

This all looks very compelling “on paper.” But execution is the key. And we’ll see how much synergy there is and how effectively all these assets come together. In my mind that’s far from certain.

The WSJ article neglected to mention 1-800-YellowPages, which could develop into a significant asset and further solidify a “consolidated” advertiser value proposition. Having said that, I don’t think that AT&T will be successfully able to get the yellow pages sales force to sell all these products. I also don’t think the company will be able to adopt an “agency like” approach to selling media/advertising to Fortune 1000 clients. It will be too difficult to transform the culture of the company given its size and history.

The Forrester survey mentioned in the WSJ article, citing consumers’ resistance to mobile advertising confirms other data in the market and shows that mobile, CPM-based (display) ads may not experience success in mobile, unless they’re very targeted. Search ads are another story and much more likely to succeed because of their relevance to the user query. (I would also include directory assistance in this because the behavior is search behavior.)

In other words, size does not automatically equal success.


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