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WIRELESS TELECOM SERVICESINDUSTRY & AD STRATEGY REPORT
APRIL 2017
Cornell University | 1
Why Wireless Telecommunications?
We evaluated them on the following criteria:
BudgetData availableInteresting Campaign
Cornell University | 1
Wireless Telecommunications
3Cornell University | 2
Budget
4 Companies in Adage Top
200 Advertisers of 2016
Wireless Telecommunications
4Cornell University | 3
Data AvailableOver 30% more ads airing during primetime 2014 than next largest advertiser
Wireless Telecommunications
5Cornell University | 4
Interesting Campaigns
Comparative Comparative with Price Comparison
Humor in Ad Celebrity in Ad
Wireless Telecommunications
6Cornell University | 5
Interesting Campaigns Cont’d
Wireless Telecommunications
Comparative Credence Attributes (reliability)
Search Attribute Combative Call-to-Action (Switch)
INDUSTRY REPORT
Cornell University | 7
Wireless Telecommunications
8Cornell University | 8
Operate transmission facilities to provide direct communication through radio-based
cellular networks.
Wireless Telecommunications Providers
9Cornell University | 17
Alarm, Horn & Traffic Control Equipment Manufacturing
Computer Manufacturing
Semiconductor & Circuit Manufacturing
Telecommunication Networking Equipment Manufacturing
Wired Telecommunications Carriers
Wireless Spectrum
Consumers
Telecommunications Resellers
Wireless Telecom Providers
Wireless Telecom Supply Chain
Wireless Telecommunications
10Cornell University | 9
Wireless Telecommunications
Product & Services Segmentation Key Technology
•Switched off
1G
•Declining dominance
2G (MMS)
•Mobile Internet
3G
•Current
4G, LTE
•Coming soon
5G
Telecommunication Industry Services & Product Offerings
Source: IBIS World
11Cornell University | 11Source: IBIS World
Growing Demand For Mobile Internet Access
Est. 2017: 311.4M Connections (U.S. Pop: 326M) Growth rate slowing down, but steady
Est. 2017: 14.8% Growth rate is increasing
Wireless Telecommunications
12Cornell University | 12Source: IBIS World
38%
33%
14%
13%
Others2%
Market Share
2890(Highly concentrated market > 1800)
HHI
Intense competition and consolidation have decreased the number of enterprises at
an annualized rate of 0.9%over the past five years.
Major Industry Players & Industry HHI
Wireless Telecommunications
13Cornell University | 13
Coverage Map (April 2017)
Product Differentiation
Wireless Telecommunications
14Cornell University | 15
Wireless Telecommunications
Limited Assets
Barriers to Entry
Spectrum
Finite number of companies can operate cellular communication services
Allocation through auction
Wireless Telecommunications
Government Regulation
Cornell University | 16
Prevent over-charging & cramming
Anti-Trust
Merges and Acquisitions
Federal Communication
Commission (FCC)
Wireless Telecommunications
In 2011, AT&T attempted to acquire T-Mobile.
ADVERTISING STRATEGY
Wireless Telecommunications
Cornell University | 19
DIGITAL MARKETING
Cornell University | 20
Source: Spyfu Cornell University | 21
Wireless Telecommunications
On average, AT&T invests in +54% more paid keywords per month than VerizonNumber of Paid Keywords Per Month for Last 12 Months
19Source: Spyfu Cornell University | 21
AT&T has the least cost-efficient paid ad strategy, with high average PPC costsTotal AdWords Budget & Number of Paid Click for Last 12 Months
Wireless Telecommunications
Average PPC
• AT&T: $3.58
• Sprint: $1.67
• T-Mobile: $1.67
• Verizon: $1.95
TV ADVERTISING
Cornell University | 22
Wireless Telecommunications
21
Content Analysis
Wireless Telecommunications
Cornell University | 23
Wireless Telecommunications
Primetime Advertising Strategies
22Cornell University | 36
Wireless Telecommunications
Primetime TV
Analysis Methodology
10279 Ads
Analyzed primetime strategy on: Time Placement Program Type Network Ad Creative Cost Efficiency
Advertiser Focus: 4 Major Telco Operators Verizon AT&T Sprint T-Mobile
Source: 2014 Primetime TV Advertising Data Cornell University | 24
Wireless Telecommunications
Advertisement Volume DistributionCY 2014 Primetime
Average Ads Per Day
Ad allocation across time is more pronounced for Verizon and AT&TTotal # Ads By Time and Month
Source: 2014 Primetime TV Advertising Data Cornell University | 26
Wireless Telecommunications Time
AT&T implements a “first-in” strategy, striving to be the first industry ad seen by viewersNumber of Ads by Ad Block for Programs with 7 Ads Block
Source: 2014 Primetime TV Advertising Data Cornell University | 27
Wireless Telecommunications Time
Sprint has the largest time elapse between its same day adsAverage Time Elapsed Between Same Days Ads By Network
Source: 2014 Primetime TV Advertising Data Cornell University | 28
Wireless Telecommunications Time
AT&T heavily invests in cost-saving channelCost-Effectiveness Across Networks
Source: 2014 Primetime TV Advertising Data Cornell University | 31
Wireless Telecommunications Ad Spend
Verizon differentiates itself through a content-driven strategyTotal Number of Unique Ads by Ad Lifetime (# of Runs)
Source: 2014 Primetime TV Advertising Data Cornell University | 32
Wireless Telecommunications Ad Creative
Providers target months were Verizon creative count is the lowestTotal Number of Unique Ads by Month
Source: 2014 Primetime TV Advertising Data Cornell University | 33
Wireless Telecommunications Ad Creative
34
Content Analysis
Wireless Telecommunications
Cornell University | 35
TV Advertisement Content Analysis
Wireless Telecommunications
Cornell University | 11Cornell University | 36
Wireless Telecommunications
Content
Analysis Methodology
110 AdsAd Selection Procedure: Availability Sampling –using ads found on YouTube
Coded for presence of… Humor Celebrities Emotion Call to action (e.g. “Switch”) Informative Comparative
Limitations: Sample most likely represents ads with some entertainment value
36Cornell University | 37
Wireless Telecommunications
Characteristic of Combative Advertising
Supply side
Advertising with the goal of stealing customers
Characteristic of mature markets
Prisoner’s Dilemma
Combative Advertising
37Cornell University | 38
Wireless Telecommunications
Advertise Don’t advertise
(38%, 33%) Verizon steals market share from AT&T
AT&T steals market share from Verizon
Relative market shares presumably remain unchanged, and profits
increase due to decreased advertising expenditures
Ad
vert
ise
Do
n’t
A
dve
rtis
e
Combative Advertising: Prisoner’s DilemmaAT&T
Ve
rizo
n
38Cornell University | 39
Wireless Telecommunications
Sprint & T-Mobile heavily rely on call to action or “Switch” contentCall to Action Ads Percentage of Total Sample by Advertiser
39Cornell University | 40
Characteristic of Comparative Advertising
Advertising that specifically mentions competitors
Efficient locally, but exaggerates excessiveness of advertising in whole market
Comparative AdvertisingPaul Marcarelli Switches to Sprint
Colorful Ball Wars
Cornell University | 11
Paul Marcarelli Switch to Sprint
Wireless Telecommunications
Cornell University | 42
41Cornell University | 43
Wireless Telecommunications
“They’re using our 2002 pitchman because they’re finally catching up to where we were in 2002. Of course since then, we’ve spent billions of dollars - $11 billion last year alone – improving and expanding America’s best wireless network.”
-Jeffrey Nelson, Verizon
42Cornell University | 11
Color Ball Wars
Verizon released a commercial about a study which showed rigorous results in favor of Verizon
Sprint responded with a similar commercial rebutting those findings
T-Mobile responded with a similar commercial that used humor and celebrity to undermine the validity of the original study
Wireless Telecommunications
43Cornell University | 41
Wireless Telecommunications
AT&T minimally relies on comparative advertisingComparative Ads Percentage of Total Sample by Advertiser
44
Characteristics of Humor in Advertising
Humor decreases ad recall, but increases brand attitudes (Gelb & Zinkhan, 1986)
May be used to reduce validity of comparative advertising
Wireless telecom capabilities is a dry subject, so companies often use humor to try to make it more exciting
Cornell University | 44
Humor in Advertising
Wireless Telecommunications
45Cornell University | 46
76.7% of AT&T ads used humorHumor in Advertising: AT&T
“It’s Not Complicated” campaign (2014)
Wireless Telecommunications
46
“It’s Not Complicated”
(2014)
AT&T
“Don’t Be Afraid of Dead Zones”
(2008)
Verizon
“Pets Unleashed” (2015)
T-Mobile
“No Need for Extreme Measures”
(2017)
Sprint
76.7%Of ads contained
humor
51.9%Of ads contained
humor
69.3%Of ads contained
humor
69.2%Of ads contained
humor
Cornell University | 45
Humor in Advertising
50
Characteristics of Informative Advertising
Purpose of advertising is to convey information
Reduces search costs
Pro-competitive
Cornell University | 50
Informative Advertising
Wireless Telecommunications
51
“Food Court” (2014)
AT&T
“More Everything Plan” (2014)
Verizon
“We Killed the Contract” (2014)
T-Mobile
“Dad Joins the Framily” (2014)
Sprint
43.3%Of ads were informative
85.2%Of ads were informative
74.1%Of ads were informative
96.2%Of ads were informative
Cornell University | 51
Informative Advertising
56
Characteristics of Persuasive Advertising
Advertising creates needs and wants
Frequently used when reputation is important (as with credence attributes)
Emotional appeal Arouse emotions; more
visceral responses Don’t require logic
Cornell University | 56
Persuasive Advertising
Wireless Telecommunications
57
“Long Distance” (2009)
AT&T
“Brothers” (2014)
Verizon
“Home for Holidays” (2012)
T-Mobile
“Veatrice’s100th Birthday”
Sprint
16.7%Of ads contained emotional appeal
11.1%Of ads contained emotional appeal
11.1%Of ads contained emotional appeal
7.7%Of ads contained emotional appeal
Cornell University | 57
Emotional Appeal in Advertising
62
Characteristics of Celebrities in Advertising
Sales increase with celebrity-related ads (Elberse & Jeroen, 2011)
Demand for products increases with celebrity success (Derdenger et al., 2017)
Cornell University | 62
Celebrities in Advertising
Wireless Telecommunications
63
“Same Plan For Everyone” (2014)
AT&T
“School Dance” (2014)
Verizon
“No Contract” (2014)
T-Mobile
“Totes McGotes” (2014)
Sprint
10.0%Of ads featured
celebrities
44.4%Of ads featured
celebrities
25.9%Of ads featured
celebrities
23.1%Of ads featured
celebrities
Cornell University | 63
Celebrities in advertising
Wireless Telecommunications
RECOMMEDATIONSRECOMMENDATIONS
Cornell University | 64
Wireless Telecommunications
Cornell University | 11Cornell University | 65
Goal: Find company with promise of large future returns
Future Monopoly: Twitter vs. New York Times
Barriers to entry
Comparative pricing advertising
Mature Market
Venture Capitalist InvestmentWireless Telecommunications
66
Goal: Find companies that are underpriced in the market
No future monopolies
Stocks with low P/E earn larger returns than stocks with high P/E
Stock Market Analyst
Short T-Mobile
LongAT&T
Verizon
Cornell University | 66
Wireless Telecommunications
67
Do
Target more on network
Use humor Use comparative pricing in ads
Combative calls to action
Increases brand attitude
– credence attributes (Gelb,
Zinkhan 1986)
Advertising Strategy
Cornell University | 67
Wireless Telecommunications
Don’t
Questions
Wireless Telecommunications
Cornell University | 68
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