Dialing Up Bigger Profits With Advertising
To: Bob Allen, chairman, AT&T;
Bill McGowan, chairman, MCI
Bill Esrey, chairman, US Sprint From: Mickey the Hollywood Agent
Hey, guys! Love your ads. Candy Bergen is scrumptious, and Cliff Robertson just radiates class. But I’ve been thinking--you guys really should be making more money from advertising than you spend on it.
You guys are networks, right? Every day, you reach out and touch more people than any other medium. Maybe your programming doesn’t resemble HBO’s or ABC’s, but, hey, nobody’s perfect. The fact is, you’ve got a terrific billion-dollar opportunity to milk your medium. Trust me, what worked for Bill Paley of CBS will work for you guys. Why not sell advertising on your networks?
With a touch of technology and a smidgen of software, you could rake in more advertising profit in a month than Time Warner’s magazines collect in a year. What’s more, you can reap those profits while giving the public what it really wants: more choices and lower prices. Have I got your number or what?
Remember, you guys are already in the information programming business. According to the Federal Communications Commission, your customers made 761,849,947 interstate calls last year for directory assistance. That is, there were more than three-quarters of a billion calls over your networks to get a phone number in another state. At roughly 50 cents per directory assistance call, we’re talking about a $400-million annual market. Not bad.
Directory assistance is your wedge into the advertising marketplace. Why not create an information option on the network? If people want to pay their 50-cent fee to dial the area code and 555-1212 for long-distance directory assistance, they still can. But also give them a new number, say, 555-1313, that lets them make their directory assistance calls for free.
How do you do that? By getting advertisers to sponsor directory assistance. When customers call 555-1313, they’ll get brief 15-second audiotex advertisements. Maybe American Express touting the value of its Gold Card; American Airlines announcing special travel fares, or Blockbuster Video promoting a two-for-one special.
The system can even be configured to let the customer choose which advertisement to hear. Press 1 for financial services , press 2 for travel or press 3 to hear what’s on sale at Sears. For an added fee to the advertiser, customers can even press a key that allows the advertiser to send more information directly to their home. Installing this technology would be a marginal cost for you.
Advertisers would now be able to target their advertisements to the various telephone exchanges, which can be even more precise than ZIP codes. So American Express can buy a national voice ad that reaches anyone making a long-distance information call, or Procter & Gamble can buy an ad that targets only a test market neighborhood in Peoria. So instead of being a trespassing telemarketer annoying people with computerized phone calls, you’re letting people choose to hear advertising in exchange for a free call. It’s pay radio with a targeted audience. No matter what the customer chooses, you make money.
You can also move into business advertising. Businesses worried about long-distance information charges now have a way to manage costs. Companies can choose to dial directly to the long-distance operators or perform a cost-benefit trade-off and dial through advertiser-supported information.
Because you know all the telephone exchanges for businesses--law firms, local industry, etc.--you can give advertisers the specificity they now demand. Xerox, IBM and temporary services companies will pay a premium to capture mindshare of key business customers. Your ads can build in an option for the business customer to key in their fax number to get more information. You make money coming or going.
The key is that your networks lend themselves to this new advertising medium. You’ve got the information people want. You’ve got potential advertisers who want to reach those people. This is what advertising in the Information Age is all about. Go for it.
But guys, don’t stop there. Weave advertising sponsorship throughout the network. This Mother’s Day conversation brought to you by . . . . Give people the option to get a discount on their long-distance calls if they listen to ads first. Who knows? In the same way that most people love to get junk mail, maybe most telephone customers wouldn’t mind hearing a clever 30-second or even 60-second ad before they make their long-distance calls, so long as you give them a decent discount. If that’s true, then we’re talking about billions in advertising revenues.
Needless to say, the local phone companies would love to be able to provide ads for local directory assistance (422 instead of 411, perhaps?) but the AT&T; antitrust decree prohibits them from offering information services. So, for now, the marketplace is all yours.
Hey guys, why should Time Warner, CBS, ABC, Times Mirror and the cable companies get all the advertising dough? Dial A for Advertising and ring in some new profits.
Gotta go. My cellular phone is beeping.
