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How the Wireless Carrier Price War Could Change Marketing

Steve ManattSeptember 04, 2014

An intense price war has started in the US wireless industry and its impact will be greater on all marketers than just lower cell phone bills.

The pressure is on this industry’s marketing teams as they find their CFOs will not be able to fund their historical $6 billion in annual media and marketing dollars. Hopefully we will see a break in the logjam on next generation marketing tools. Marketers in all industries should be watching what evolves in the marketing strategies, tactics and tools from this fight.

The now jilted merger partners of Sprint and T-Mobile are targeting each other’s subscribers with discounted pricing. Sprint started that discounting and actually called out the network quality of the low price leader, T-Mobile. We have seen this happen before and the competitive response is for the feature leaders, AT&T and Verizon, to focus on protecting their current customers with feature messaging about ubiquitous coverage and awesome phones. The price leaders will be yelling about price. And everyone is targeting their competitor’s customers because there are very few new wireless users in the US.

What is different this time is that marketers have less money because the rate plan cuts are deep and are being matched by all the players. Also, the offers from T-Mobile and Sprint to pay $350 to a switching customer are funded by the marketing budget as a Cost of Acquisition, which is normally around $300 to $200 per new customer.

If you have not yet stopped reading this article and called your cell phone provider for a better deal, what marketing innovation should you be looking for in this fight?

1. Television will become more targeted.
Wireless carriers are some of the biggest spenders in town. The objectives are both brand reinforcement for existing customers and call to action offers for switchers. These segments don’t watch different TV shows or at different times of day. Because addressability at the household level is now feasible, now there is a reason to push spend thru these new tools. Television could become more targeted and thus efficient for all marketers.

2. Classic direct marketing discipline will be applied to digital marketing. The e-commerce and digital marketing team of wireless carriers have been seeing budget flow to them. However, they remain stuck in a world of measuring clicks on ads and sales on the web site. They need the measurement tools and test and learn processes that gauge actual visitors and sales in the stores, where the vast majority of sales still happen. Tools to link off-line and on-line activity have been launched in the last couple of years, now is the time to optimize the digital tactics with old school direct marketing processes. All digital marketers are looking for the path to this improvement.

3. Omni-channel marketing must work in large marketing organizations. Wireless carriers have big marketing budgets and thus big marketing organizations. One of the main impediments to true omni-channel marketing has been for the different, channel-based organizational silos to deliver a consistent consumer experience. With a mix of messages that need to be delivered to different customers, creating a consistent customer experience is key. Is there a chance that the competitive and budget pressure can force the CMOs to change their organization alignment and show the rest of us how to deliver a omni-channel experience? We all hope so for both the profession of marketing and for relief on our cell phone bills.