AT&T And Verizon Battle To Market The iPhone
MARY LOUISE KELLY, host:
Meanwhile, the wait is over. After months of speculation, today came the big announcement.
Mr. DAN MEAD (CEO, Verizon Wireless): Now, wireless consumers everywhere have a choice - the revolutionary iPhone 4 on the nation's most reliable network.
KELLY: The nation's most reliable network. That would be Verizon, at least according to Verizon CEO Dan Mead, who we heard speaking there. Rival AT&T would, of course, beg to differ. Until now, AT&T was the exclusive carrier for the iPhone, and the rivalry between the two companies over which of them delivers the best network and technology has already produced some great ads. The prize? Convincing potential buyers that their iPhone is the best one. The battle got us thinking back over a long tradition of ad wars. Think Mac versus PC, Coke versus Pepsi, Domino's versus Pizza Hut. So how do you choose a product during an ad war? You can call us. 800-989-8255 is the number. You can email us. We're at email@example.com, and you can join the conversation at our website. That's npr.org. Click on TALK OF THE NATION.
Well, joining us now is James Othmer. He's the author of "Adland: Searching for the Meaning of Life on a Branded Planet." And it's nice to have you with us.
Mr. JAMES OTHMER (Author, "Adland: Searching for the Meaning of Life on a Branded Planet"): Hey. How are you? Thanks for having me.
KELLY: Oh, we're glad to have you. So, James Othmer, we're talking about two phones that are very, very close in terms of features, capabilities. How does the company like Verizon or AT&T try to convince people to buy their phone?
Mr. OTHMER: Well, you would think they would lead with their benefits, but what this is going to quickly devolve into, I imagine, is going to be slamming the weakness of the competitors (unintelligible)...
KELLY: iPhone trash talking.
Mr. OTHMER: I think you're going to see trash talking quite a bit. In the instance of Verizon, AT&T will get on top of them for not having enough speed and not enough network capability. Verizon is going to go out at AT&T because they're going to say you just don't have the network coverage. They actually launched a salvo several months back which already started that war there by mocking AT&T's limited 3-G network coverage. So it's going to get interesting, and I imagine kind of ugly.
KELLY: And in the ad world, is the belief that this kind of negative advertising works? Does it actually persuade consumers?
Mr. OTHMER: Unfortunately, yes, whether it - you can go back to political ads from Daisy to Jefferson versus Adams in 1800. Negative seems to work with focus groups well. I worked on the AT&T business when they went through deregulation, and they immediately switched from reach out and touch someone, which is one of the warmest and fuzziest taglines of all time to...
Mr. OTHMER: ...the right choice, which is a very competitive differentiating proposition, and this was to counter MCI, which was this upstart taking on the big bad monopoly. And that's probably the onset of the telephone wars.
KELLY: When you look back, James Othmer, over some of the classic ad battles of the past, you know, beyond cell phone wars when you look back - I'd say Coke versus Pepsi - do you see similarities? Or do you see lessons that would apply as these two companies do get out now?
Mr. OTHMER: This one is interesting because it has a lot of complexity to it because you're talking about a partnership with another brand. You're talking about price, speed, network capabilities, the esthetic and technological-wow factor of the gadget. All of these things are incorporated into an ultimate brand choice or - I even - I'm reluctant to use the word brand loyalty because I think here, so much has to do with performance.
Mr. OTHMER: And there are a lot of AT&T people who, you know, love the iPhone and signed up for it right away but were not very happy with the coverage, and they can't wait to make the switch. So here you have a churn with your customer base and a lot of different factors. Coke versus Pepsi is a parody product for the most part, you know, certain differences and taste. And that had to do just with having fun with the war. And I think consumers like those kind of battles because it wasn't real ugly. It was more in good fun.
KELLY: Well, and it's easy to use both - the same minute and decide what you like best. Really, it's so easy to switch between...
Mr. OTHMER: Sure. And, you know, Apple versus Mac - Apple versus the PC is a similar thing. I think people have quite a bit of fun with that, although it's gotten quite - you know, very ugly. And the 1984 Apple spot could probably be looked at as the first salvo in that war. It ran during the Super Bowl. It only ran once, but it sort of positioned PC Microsoft users as these kind of George Orwellian drones. So that staked some territory for Mac back then, and they're still going at it today.
KELLY: Let me bring in a caller to join the conversation here. This is Warren, and he's on the line from Tampa in Florida.
WARREN (Caller): Hi. Thanks for taking my call.
KELLY: Our pleasure. What do you think?
WARREN: Well, I was just going to say that I think that consumers ultimately pay the price because, you know, you get both sides saying we're the best. And, you know, for something cheap like Coke or Pepsi, you can taste both and then make a choice. But for something more expensive like a PC or a Mac, it's kind of tough to make that decision. So - and yeah, yeah. You were saying it got pretty ugly. I had big time arguments with friends and professors about how, you know, oh, Mac versus PC. And it was getting pretty ugly at one point. So I think that both have good things and both have bad things. So it's kind of a toss up to me.
KELLY: Warren, are you going to try them both to make up your mind?
WARREN: Yeah, I think I will. And, you know, I'm on Verizon and I share a plan with my brother and my wife. And he's all excited because he's really into technology and all the gadgetry and stuff. So he's going to definitely get an iPhone. But for me, I just need to be able to call and text messages. So...
(Soundbite of laughter)
KELLY: There you go. All right. Thanks so much for the call, Warren.
KELLY: We've got an email here. This is from Suyang Li(ph). And they write: I don't use advertisements to make decisions because there are so many good resources online to do in-depth research. Advertisements are always more entertaining, though.
James Othmer, how is a consumer to go about truth-squadding some of the claims made in these ads? Should we actually believe what they're telling us?
Mr. OTHMER: Absolutely not.
(Soundbite of laughter)
Mr. OTHMER: The large type...
KELLY: The voice of the cynic.
(Soundbite of laughter)
Mr. OTHMER: Yes. The large type giveth and the small type taketh away. So, yeah. You should not believe everything. I think there are ways online to vet these things and to look at how the coverage is in you area and what the features are and what the price plans are, which could get really complicated.
I think Warren's point is really right on. If you're going to mudsling over minutiae, a brand risks talking about itself or to each other rather than to consumers. And I think over the long haul, you can really do damage to a brand.
And what's interesting in this instance is I don't really think that either AT&T - or Verizon, in this instance - is really a great - it doesn't have a lot of human brand equity. It's mostly about utility right now. And what's ironic is that the gadget, which is made by Apple, is probably - has the most human brand equity of all. So they're trying to glom onto that, in effect, as well.
KELLY: All right. Let's take another caller. This is Lynn(ph). She's calling from Tracy, Minnesota.
LYNN (Caller): Hi. Thanks for taking my call.
KELLY: You're welcome. How are you?
LYNN: Good. Thank you. You know, I do not immediately jump on the bandwagon. I'm kind of a cautious person, and I do research. I listen to people that I have experienced with who had experienced the products. And, you know, I also use Consumer Reports an awful lot.
KELLY: Absolutely. Is that a smart strategy, James Othmer?
Mr. OTHMER: That's a great strategy. And, you know, I listen to friends quite a bit. I think that you're going to see a massive push by both of these brands. I know AT&T has already geared up with a whole new advertising campaign. They've also done the tactical move of trying to renew as many contracts as possible. I believe more than 80 percent of their iPhone users are under a two-year contract. So it was so preemptive move on their part to retain people, because you spend so much time trying to just keep your customers that - I think that was a real smart move, also. And I'm sure Verizon now is ready to come out with a big launch to tout themselves. So, yeah. Don't just listen to the ads.
KELLY: All right. Thanks so much, Lynn, calling in from Tracy, Minnesota.
LYNN: Thank you.
KELLY: Thank you.
Let me take one more call. On the line from Philadelphia, Linda. How are you?
LINDA (Caller): I'm fine. Thanks. Thanks for taking my call. We are an Apple family, and we've had an iPhone for some years. And we actually checked into the Droid to consider switching over, because we were so unhappy with all the dropped calls that we had.
LINDA: So, yeah. Believe me, I don't work for Verizon. But we've been, like, waiting for this announcement for some time, because we were a Verizon family for many, many, many years until the iPhone came along. And we're very happy to switch back.
KELLY: Do you think you'll keep both for awhile and see which one is working better for you?
(Soundbite of laughter)
LINDA: As I said, we've been waiting for this announcement. You know, there've been rumors galore. But we're definitely switching over to Verizon. And we happen to like the iPhone. So...
KELLY: You're sticking with that, but switching carriers.
LINDA: Yeah. And advertising won't have anything to do with the decision. It comes from our own experience.
KELLY: Okay. Thanks so much for calling, Linda.
LINDA: Thank you. Bye-bye.
KELLY: This is some mail to read and let you respond to, James Othmer. This is from Charles in Washington State. And he writes: Dear NPR, regarding your AT&T-versus-Verizon-iPhone ad wars, fond memories of the Hertz-versus-Avis campaign spring instantly to mind. If an admittedly aging memory is correct, he writes, even the iconic Mad magazine ran with that fight, bringing no end of grade-school laughs on family road trips in a '66 Impala. It brings back memories.
(Soundbite of laughter)
Mr. OTHMER: That's great. Yeah. They were great ads. I would think they're -they were more good natured than what we're going to see here. But I love that campaign.
KELLY: Absolutely. Absolutely. Do you think, James Othmer, is there room for both?
Mr. OTHMER: I think there is room for...
KELLY: Verizon, AT&T, can they both have a very successful operation, selling iPhones?
Mr. OTHMER: Sure. People are not very tolerant, though. As soon as you lose coverage, price becomes less of a factor. If you don't have coverage or if there's some kind of network fallibility, people will switch. And Verizon has the benefit, right now, of not having any iPhone customers, so there can't be any disgruntled iPhone customers. So they've yet to get the kinks out. They may have learned from AT&T's lessons. And they're also going to have a surge in their network usage when they sign on.
I believe they could activate up to nine million iPhone users. So they could have a surge there, and they may have their share of problems, as well. So it remains to be seen, how well they handle it. And I think if you handle it and you succeed, people may go there. But, sure, there's room for both.
KELLY: All right. We're talking about Verizon's big announcement today about the iPhone. You're listening to TALK OF THE NATION, from NPR News.
All right. And we're still speaking here with James Othmer, the author of "Adland: Searching for the Meaning of Life on a Branded Planet." And I think we have room to squeeze in one more caller - Eric from Norfolk, Massachusetts. You're on the line.
ERIC (Caller): Hi. I actually compare with technical notes, and I credit AT&T for being a little more accurate there. What tickles me is Verizon's 4G claim. I'm curious what happens when all the iPhone users turn on their phone and they get 3G access.
KELLY: James Othmer, what do you think? Is that a possibility?
Mr. OTHMER: It sounds like he knows more than I do about that network. But I think that goes with, again, the expectation of having an alternative versus the reality of what their capabilities are and how well Verizon deals with that and how - you know, that's going to have a lot to do with their customer satisfaction. And I'm sure AT&T will be watching that quite closely.
KELLY: All right. Eric from Norfolk, do you want to come back at that, this question of whether false advertising really hurts a company?
ERIC: I don't believe it will, actually. I don't think enough people know what 4G is versus 3G. But I - you know, Verizon has to be ready for that amount of usage. I certainly understand why AT&T doesn't allow Face Time over anything Wi-Fi.
KELLY: All right. Thanks very much for the call.
Mr. OTHMER: I think corporate attorneys will be vetting this quite closely, and...
Mr. OTHMER: ...there's a whole market in that. They're going to challenge each other and counterchallenge, demand that ads be taken off the air or offline. And again, this is what happens.
KELLY: This is what happens. I've got one more quick email to bounce off you. This is from Jane in Michigan. She writes: The joke around our house is it's easier to get out of your mortgage than it is to get out of your Verizon contract. Fewer penalties.
Is that the key? Could that be a selling point for these companies?
Mr. OTHMER: I believe it is a selling point. I think people will now have the competitive advantage of holding up the opposition's contract and saying this doesn't force me or hold me to this. So you might see a little bit more leniency. And I think one of the few benefits of all of this, we're going to hear quite a bit of noise and clutter and mud-slinging. But I think, ultimately, competition is good for the consumers, and it's good for the ad agencies, too.
KELLY: All right. Thanks a lot.
Mr. OTHMER: You're welcome.
KELLY: We've been talking with James Othmer, the author of "Adland: Searching for the Meaning of Life on a Branded Planet." He joined us from our bureau in New York. Transcript provided by NPR, Copyright NPR.