Note to Telecoms: Rebrand or Die

The recently announced merger between BellSouth (BLS) and AT&T (T) created a new No. 1 company in the telecom business, bumping Verizon (VZ) to the No 2 position (see BW Online, 3/7/06, "Is Verizon Heading South?").

It also added yet another chapter to the story of AT&T, one of the best-known names in business. It was only two years ago that Cingular Wireless bought AT&T Wireless in a $41 billion deal and rebranded the service under its own name. Now SBC, which owns 60% of Cingular, has announced that the post-merger company will assume the AT&T name across the board, making the cellular company formerly known as AT&T Wireless an AT&T brand again.

BusinessWeek Online Innovation & Design editorJessie Scanlon recently spoke with Ron Pompei, creative director and CEO of New York-based brand-strategy firm Pompei A.D., about this the challenges the company will face in rebranding itself post-merger -- and about the changing nature of telecom brands in general. Edited excerpts of their conversation follow:

In positioning their new brand post-merger, what are the big issues AT&T and SBC have to consider?

The challenge that they face is the same for all telecom companies. People use these technologies to move content around or to create their own content -- it's about technology that allows people to express themselves in ways that they couldn't before. That means merging telecoms need to think about what capabilities they're assembling, and what strategic partners they can bring in.

So it's less a matter of merging two telecom brands and more about rethinking what a telecom brand is?

Look at Sony (SNE), which a few years ago moved from seeing itself as a hardware company to seeing itself as an entertainment company. Or take Apple (AAPL) -- no one thinks of it as just a computer company anymore. In the telecom space, it's not about the technological object, it's about the way that those objects interact with a matrix of applications and content.

It's so silly to talk about a phone company. There are so many applications of these technologies, and most of them aren't going to be driven from the top down. People will find ways to use this stuff that companies never imagined.

Women go into dressing rooms today, they change their outfit, they take a picture and e-mail it to their girlfriends and call them. If women are doing that, why doesn't every store set up Internet access in the dressing rooms to allow women to communicate more easily? And it can be branded -- a portal that you can step through to experience the brand in a way that expands the consumer's life.

This merger or convergence will involve people's ability to affect their experience and their environment. Telecom companies have to see themselves as providing a creative platform that allows for self-actualization.

Traditionally, the handset makers have had an easier time building strong brands because the Motorolas (MOT) and Nokias (NOK) create tangible products that people can see and touch and associate with the brand. As the importance shifts away from objects toward experience, will the carriers now have the branding advantage?

It's not so much a leg up -- they're going to be on par with the handset makers. The two will have to see each other as strategic partners in a deeper way to create a very strong platform that allows the individual to communicate, create, filter information, and connect with other people in their psychographic.

The carriers are going to be seen as having more leverage if they embrace the opportunity. But honestly, the service providers, the handset makers, content creators -- everyone is trying to converge on the same concept: How can we create a seamless environment in which consumers can move from one device to the next, accessing any content that they want, anytime and anywhere.

Looking are telecom branding pre-1984, Ma Bell was everyone's Ma. The company had a uniform brand identity. Today, we have service providers like Amp'd that focus on specific marketing segments (see BW Online, 1/5/06, "Amp'd: Cells for the Maxim Set"). Are the days of the mass telecom brand over?

Yes. Look at Telemar in Brazil. It just created a whole service just for young people, called Oi. And it's not just phone service. They have a magazine and social events. It's a whole culture. That's the way telecom branding has to go.

Remember how they said books and magazines would go away when the Net arrived? Well, there are so many magazines still. Marshall McLuhan first said it: When one method of mass communication is superseded by another, it doesn't disappear -- it fragments. It doesn't have to speak to the mass market, so it speaks to the niche market. As it evolves, it will fragment more and more into narrow psychographic networks.

So if telecom companies begin focusing on niche markets, does it still make sense to pay big bucks to rename the Sox' ballpark US Cellular Field?

I think so. But the reason I'm saying yes is that we're working with [the European telecom] O2. AEG is redeveloping the Millennium Dome in London, and they're turning it into an entertainment venue. There will be restaurants and retail, and O2 is probably going to brand it.

But it's not just putting their name on the outside. If you're a telecom company, you need to figure out how to do something cool with your technology in that environment that separates your customers from others in the dome. How do they find their friends inside the dome? How do they communicate with people outside the dome? How do they get information about shows or events happening? All of those things could be achieved by integrating the technology with the physical space.

More generally, how do telecom companies in merger situations make the decision of what to drop and what to keep?

One of the biggest things that's going to be challenging for these brands is for them to give up the old notion of what a brand is. Look at branding and advertising over the last 50 years. They accentuate your insecurities. What branding and advertising always offered was something that made you whole.

What brands now have to do is say, "I'm recognizing you as the complete and incredible being that you are. I have something here that may suit your goals in life. It may help you express yourself in ways that you haven't before. If I, as a company, can, with my creativity and innovation, bring you something that allows you to express yourself, you're going to like me. You're going to like me a lot." That's the change that brands have to make.

There were no telecom carriers in Interbrand's most recent Top 100 Global Brands Scorecard. Why have telecom companies typically had such weak brands?

Telecom companies think they're in the business of technology when they're really in the business of connecting people.

We recently did a survey of shops where people buy cell-phone service. They're terrible. The customer service is no good. It's as if the companies have defined themselves too much in the virtual world and not enough in the real world. If you were treated in a restaurant the way that you are treated in these telecom centers, if you even went in a restaurant that looked like those places, you wouldn't go back. Put simply, there's too much metal and not enough skin.

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