Agency: Abbott Mead Vickers BBDO Author: Mike Teasdale

British Telecommunications

Extra Telecoms: How ET Enabled BT to Be Greater Than the Sum of its Marketing Parts

 INTRODUCTION

The IPA has almost 700 case histories in its data bank. In almost every case they demonstrate 'a better understanding of the crucial role advertising plays in marketing' by stripping away all other marketing efforts and leaving advertising to bask in the spotlight of what it has achieved in isolation. 

But, advertising in the real world rarely works in isolation. Advertising's role in marketing is not just that of a highprofile flashy athlete who can win the day single handedly. Increasingly, advertising is part of a much wider communications programme. It is time to gain a better understanding of the crucial role advertising plays as a key team player effective alone but also effective in bringing out the best in the rest of the team. 

The muchawarded First Direct case from 1998 was the first to explore advertising's role as a team player. It 'took the concept of efficiency measurement to an innovative new level by considering advertising's magnifier effect on other communications' (Adworks 10). The case looked at the role TV advertising plays within a multimedia campaign, proving that the TV advertising had a magnifier effect on other media activity press, posters and direct mail. 

Our paper takes this examination of advertising's magnifier effect on other communications activity to a higher level. It does this by doing the exact opposite to every other IPA paper ever written. Rather than discounting the effects of nonadvertising marketing efforts, it actively seeks to include them. 

This paper proves that using the ET idea in all BT UK mass market advertising (not just TV) directly resulted in an improved uptake of new world BT products such as digital lines and Internet usage. It also proves that taking the ET idea into nonadvertising communications like direct mail enhanced product uptake still further. 

Finally, this paper demonstrates that the synergistic use of the ET advertising idea has also boosted the efficiency of noncommunications media such as telemarketing activity, again leading to increased product uptake. 

In short, this paper proves that big advertising ideas such as ET are worth their weight in gold because they enable the whole marketing effort to be greater than the sum of its parts. 

To do this, the paper employs state of the art econometric modelling techniques to quantify the effects of the synergy created by using ET across all marketing disciplines. The model quantifies both the direct effects of advertising on product uptake and the indirect effect in driving the efficacy of other marketing levers such as direct mail and telemarketing. 

The model used in this paper can thus be summarised as shown in Figure 1.

BUSINESS BACKGROUND AND RESULTING MARKETING AND COMMUNICATIONS CHALLENGES

BT is an active player in a broad range of communications business areas, serving the needs of homes, individuals and businesses of all sizes, both in the UK and abroad. 

Core fixed line telephony is the company's heritage and remains a huge part of its business. Increasingly, however, this core is being supplemented by involvement in mobile voice telephony and in data particularly multimedia, Internet and ebusiness.

Over the past three years the marketing challenges facing BT have changed radically. In the days of BT's highly successful 'It's Good to Talk' campaign life was relatively simple. The cable industry was embryonic and fragmented, competition was limited and BT enjoyed a virtual monopoly on voice traffic. As such, BT had only one marketing objective call stimulation. By encouraging market growth in voice calls, BT stood to benefit as market leader. `It's Good to Talk' was supremely successful at accomplishing this task by effectively changing consumer attitudes to phone use and achieving a 6:1 return on advertising investment. 

However, times have changed. Increasing competition, BT's reducing market share and the emergence of new data markets have resulted in BT facing a radically different and more complex market. In order to become a player within the new order, BT has had to reposition itself to become more than just a telephone company. It has had to move from the old world of voice communications to the new world of data, the Internet and ebusiness. 

This paper will focus on how the right advertising idea has helped to achieve the core task that is pivotal to BT's longrun success the repositioning of BT and the selling of new world products.

THE CREATIVE BRIEF

A creative brief was developed against the backdrop of these marketing and communications challenges. It was also developed in the knowledge that the resultant advertising idea needed to be big enough to carry through to other communications. 

The brief can be summarized as:

  • 'BT is your definitive guide to the possibilities of communicating'.
  • The logic for this brief is as follows:
  • Telecommunications technology is changing rapidly, resulting in benefits to how we live and work.
  • Despite these beneficial changes, there is potential for confusion and uncertainty.
  • There is a marketing opportunity for somebody to remove this confusion and uncertainty.
  • BT is superbly placed to take this opportunity because of its unique position of trust.
  • BT has the potential to be your definitive guide to the possibilities of communicating.
  • BT was already implicitly acting as a guide to better communicating through the 'It's Good to Talk' campaign. (It was doing so implicitly because until now, better communicating had meant nothing more than talking differently. And a message about talking differently has the potential to antagonise. That's why the Bob Hoskins character had been created. He was the way of saying the things BT couldn't say directly.)
  • But now better communicating means so much more than talking. The potential for antagonism is much less because we are responding to an explicit customer need for guidance rather than driving customer change. And we are talking about kit plus emotions rather than just talking about emotions.
  • As a result, BT could now adopt the guide positioning explicitly.

THE CREATIVE IDEA

Creative teams were briefed with the guide proposition and asked to 'develop an idea that both inspires and reassures people'. The need to both inspire and reassure was important. We knew that we needed to excite people, but we knew also that we needed to hold their hands. 

The idea developed used Steven Spielberg's extra terrestrial, ET. The rationale for ET is strong. He is a communications expert. He is famous. He is loved by all. He is a living embodiment of the requirement to both inspire and reassure people. All that and, as customers pointed out delightedly, his name rhymes with BT. See Figure 2, 2a, 2b and 2c.

A key element of the idea is magic. Research showed that focusing on technology as an end in itself is, at best, cold, at worst terrifying for people. However, what that technology allows you to do is amazing. It is magical to think that you can send your thoughts and feelings to somebody you love instantly wherever they are in the world. When technology is positioned as an enabler, a means of making it even easier to keep in touch, it is embraced much more wholeheartedly. 

This sense of magic was also felt to be appropriate to ET. He himself has magical powers, bringing plants back to life, healing people, not to mention getting up and down stairs with such little legs. People warmed to the notion of ET's magical character showing us the magic of connecting and the magical ways in which we can now do it via BT. 

It was critical that we understood these key ways in which the idea worked, as it had to work beyond just advertising. Our learning allowed us to brief all the nonadvertising agencies, not only on the idea of BT and ET joining forces to bring the public the magic of connecting but also, importantly on the role that executional devices played in bringing that idea to life.

CAMPAIGN EXECUTION

Figures 2 and 3 are examples of work from all advertising media. Also shown are examples of the direct mail which used ET and the 'magic of connecting' idea. This body of work represents the most synergistic mass market campaign BT UK has ever created. 

The campaign had a consistent presence throughout the year. TV and press formed the mainstay of the advertising schedule, supported by steady direct mail and telemarketing activity (Table 1).

TABLE 1: EXTERNAL MARKETING AND TELEMARKETING COSTS ( MILLION)

Q1

Q2

Q3

Q4

External marketing costs

17.8

16.5

24.1

19.1

Telemarketing

19.3

18.6

22.5

21.7

Source: BT UK

CAMPAIGN EVALUATION

The 'Stay in Touch' campaign was launched at a time when BT was reducing advertising spend in a growth market.

Market snapshot

 

1994/1995:

1 in every 45 TV ads is a telecoms ad
BT commands 1 in every 123 ads

1998/1999:

1 in every 23 TV ads is a telecoms ad
BT commands 1 in every 160 ads

Sources: TAP

As a result, the campaign launched at a level of share of voice unprecedented for BT (Figure 4). 

In fact, the situation was even more pronounced than Figure 4 shows. The chart covers telecoms ad spend only. BT also operates within the Internet Service Provider market, which includes high levels of advertising spend behind brands such as AOL and Freeserve. 

Despite this, the 'Stay in Touch' campaign has had an astonishing impact. Over 90% of mass market customers were aware of some aspect of the campaign within 8 weeks of launch. This level has been sustained across the course of the campaign (Table 2).

TABLE 2: PROMPTED CAMPAIGN RECALL (%)

Early results
2 June 1999

Latest results
5 April 2000

Peak

TV

69

84

84

Press

33

37

37

Radio

11

26

27

Poster

18

36

36

Total campaign reach

90

94

94

Source: BMRB COS Monitor

The engine of the campaign has been the TV advertising. This has enjoyed almost double the impact per spent than the 'It's Good to Talk,' TV campaign. 

Five of the campaign's films to date (Arrival, Universe Wide Web, Chess, Party and Magic) are in BT's Top 10 most successful films ever for recall (and we've done hundreds) 

News coverage of the campaign has also been extraordinary. Over the initial launch phase, the notional cost of media coverage generated by ET was an equivalent of 370,000 (Source: Freud Communications/Mantra). (Figure 5 and  6 ). 

Clearly, this evidence shows that the 'Stay in Touch' campaign has both been efficient and made an impact. However, this in itself would not be enough for us to claim that the campaign was a success. From the start we had one core task the repositioning of BT and the selling of new world products. 

All the brand measures designed to determine customer perceptions of BT as a communications company for the future show significant positive shifts compared to precampaign scores (Figure 7). 

This shift in brand perceptions is also driving purchase intentions for new world products (Figure 8). 

This is further illustrated when we look at claimed ISP usage (Table 3). 

When we explored the data in more detail we found that the benefits of creative synergy across all advertising media are overwhelming. Shifts in brand perceptions are considerably improved when advertising in more than one media has been seen (Figure 9). 

TABLE 3: ISP MARKET SHARE

Precampaign

Postcampaign

Claimed ISP BT

10%

19%

Source: BMRB COS Monitor

The effects of creative synergy can also be seen in purchase intentions people are much more likely to get online for the first time or to switch ISP if they have seen advertising in more than one media (Figure 10 and 11). 

The campaign has also been highly effective in driving the uptake of new world products such as digital lines and Internet service provision. 

In such a competitive market, with regulation still heavily weighted against BT, the business has had considerable success in maintaining crucial lines penetration over the past year. BT finished the year in March 2000 with 19,518,000 residential lines, just 34,000 down on March 1999. 

Whilst primary lines continue to be eroded by the competition, strong Internetassociated sales of second lines and Home Highway (BT's home digital line) have enabled BT to sustain total lines and the associated revenue. second lines saw growth in excess of 202,000 and Highway grew by over 104,000 across the year. 

To encourage people to use these lines more often, BT has advertised bt click.com and BT Internet, two of its ISP products, as part of 'Stay In Touch'. As a result, bt click.com has attracted an active customer base of 900,000 in under a year (Figure 12). 

The first time BT Internet was featured in an ET execution the number of calls coming in on the dedicated 0800 number rose from an average of 18,000 calls per month to an astounding 220,000. There was a similarly spectacular uplift amongst new online users, with a hike from an average of 6000 new users per month to over 90,000 in March when the execution ran (Figure 13). 

This influx of new Internet customers has meant that BT ISP minutes now account for 7% of all BT UK call minutes. This is an increase of 170% in just under a year. 

But, is this gratifying situation really a result of marketing activity? Surely it is simply a result of the exponential growth of the Internet and would have happened regardless? To disentangle the influence of the marketing from that of the market, Brand Science were commissioned to conduct econometric modelling. This has allowed us to examine and understand the direct advertising effect on product uptake once the market variables have been factored out. 

The modelling technique also means we are able to examine the indirect advertising effect in driving the efficacy of other marketing levers direct mail and telemarketing. Finally, it has allowed us to pinpoint payback. 

This modelling process used by Brand Science is new for an IPA paper. Most previous IPA models are based on the relatively simplistic, linear techniques of OLS regression modelling. However, no one piece of research can ever provide a definitive view of the factors influencing a market and econometrics is no exception. 

The analysis used in this case draws on a wide range of techniques and tests not usually used together in such work in order to unlock as much insight from the data as possible. These include 'BoxJenkins identification stage' to identify advertising effects, carryover and branding over time. This, combined with 'Chow' and 'DF Betas' tests, was used to uncover synergies between factors. Further techniques and tests such as 'prewhitening filters' and 'multicollinearity diagnostics' were also used. 

By using this broad range of overlapping and complementary techniques within econometrics we are able to maximize insight into the sales contribution of the ET campaign. This has allowed a greater understanding of advertising's role within the marketing mix than has previously been possible. 

Before the marketing effects are assessed, it is important to account for the influence of market trends and the base line sales that would have happened regardless of any marketing activity (Table 4). 

TABLE 4: PRODUCT SALES DETERMINED BY MODELLING MARKET GROWTH AND FROM INCREASING PENETRATION (%) AND UNDERLYING SALES

Highway

2nd lines

bt click.com

Old world

Market growth

60

54

38

22

Underlying sales

66,185

310,080

257,933

2,883,465

Source: Brand Science

As would be expected, the extraordinary growth of the Internet market has had a significant influence on sales of new world products. With these factors accounted for we can now look at the marketing effects identified by the models and calculate advertising payback. 

Advertising payback has been based on BT UK's 3year annualised revenue forecast. This is a regulatory requirement which calculates the associated revenue for installation, rental and usage for each product after accounting for customer churn. Advertising payback is then calculated as follows:

Threeyear annualised revenue
less advertising costs
_________________: 1
Advertising costs

In order to quantify the impact of both direct and indirect effects of ET advertising we have then calculated cumulative payback.

The direct advertising effect on New World products (Table 5)

TABLE 5: PRODUCT SALES DETERMINED BY MODELLING DIRECT ADVERTISING EFFECT OF PRODUCTSPECIFIC ADVERTISING

Highway

2nd lines

bt click.com

Market growth (%)

9

1

19

Underlying sales

10,404

7,036

129,206

Source: Brand Science

Based on the formula above, we have determined a direct advertising payback for new world products of 1.7:1. The analysis has shown that in all new world product areas the advertising has been effective in driving sales; 1% of 2nd lines, 9% of Highway and 19% of bt click.com sales can be directly attributed to the advertising. 

Based on the formula above, we have determined a direct advertising payback for new world products of 1.7:1.

The indirect advertising effect on direct mail efficacy for New World products (Table 6)

TABLE 6: PRODUCT SALES DETERMINED BY MODELLING INDIRECT ADVERTISING EFFECT ON DIRECT MAIL

Highway

bt click.com

Direct mail

   

Market growth (%)

8

12

Underlying sales ()

9354

77,701

Indirect advertising effect on direct mail

   

Market growth (%)

3

11

Underlying sales ()

3753

73,300

Increase in direct mail efficacy (%)

40

94

Source: Brand Science

The advertising has been effective in driving direct marketing sales; 3% of Highway and 11% of bt click.com sales can be indirectly attributed to the advertising effect on direct mail. This has meant that productspecific advertising for Highway and bt click.com increased the efficacy of direct marketing by 40% and 94% respectively. 

Using the formula as before, this builds advertising payback for new world products to 2.2:1.

The indirect effect on telemarketing for New World products (Table 7)

TABLE 7: PRODUCT SALES DETERMINED BY MODELLING INDIRECT ADVERTISING EFFECT ON TELEMARKETING 

2nd lines

Telemarketing

 

Market growth (%)

14

Underlying sales ()

79,610

Indirect advertising effect on telemarketing 

 

Market growth (%)

2

Underlying sales ()

13,925

Increase in telemarketing efficacy (%)

17

Source: Brand Science

Obviously, telemarketing cannot incorporate the creative idea. However, for 2nd lines, the only new world product actively sold through outbound telemarketing, 2% of sales can be indirectly attributed to the advertising effect on telemarketing. 

The advertising has increased the efficacy of the telemarketing by 17%. The ET advertising has effectively given the telemarketers a universe of people who are already open to hear about the products they are calling to sell. 

Using the formula as before, this now builds advertising payback to 7:1.

It is clear from the results of the modelling that the advertising idea used has had an extremely powerful effect on new world product uptake. However, this is not the only advertising effect seen from the ET campaign.

The halo effect of Old World advertising

Not all ET advertising focused solely on new world products. Advertising for pricing packages and call stimulation featured a combination of data and voice messages. This advertising, still in the ET campaign, has had a halo effect on new world product sales (Table 8). 

TABLE 8: PRODUCT SALES DETERMINED BY MODELLING OLD WORLD ADVERTISING EFFECT

Highway

2nd Lines

bt click.com

Old world

Market growth (%)

19

28

20

27

Underlying sales ()

20,708

160,743

133,551

3,506,838

 

Not only did old world advertising contribute 27% of old world sales, it also had an impact on new world sales. So great was this effect that 19% of Highway, 28% of 2nd lines and 20% of bt click.com sales were generated from ET executions for other products. 

Hence, total ET advertising payback is as follows:

1,087,826,155 63,976,946
________________________: 1
                63,976,946

Thus, the final payback for ET advertising is 16:1. 

The icing on this effectiveness cake is that the magnifier effect of the advertising becomes more pronounced the further along the new world spectrum you go. Second lines, on the cusp between new and old world applications, see a 17% rise in the efficacy of other marketing activity. Highway, established within the heartland of new world products, saw a 37% rise in this efficacy. Finally, bt click.com, the most cutting edge of BT's new world products, saw a massive 94% boost from the advertising on the results of the other marketing activity.

CONCLUSION

This paper has shown that using the strong ET advertising idea synergistically above and below the line has significantly amplified the effectiveness of that activity. It has repositioned BT in people's minds as more than just a phone company. It has had both a direct and an indirect effect on product uptake, has amplified the payback for BT across all communications activity and has achieved 16:1 payback. In short, this paper proves that big advertising ideas such as ET are worth their weight in gold because they enable the whole marketing effort to be greater than the sum of its parts.

NOTES & EXHIBITS


FIGURE 1: THE ET ADVERTISING MODEL

 
 

FIGURE 2: CAMPAIGN MEDIA � TV, PRESS AND DIRECT MAIL

 
 

FIGURE 2a: CAMPAIGN

 
 
 

FIGURE 2b: CAMPAIGN

 
 
 

FIGURE 2c:CAMPAIGN

 
 
 

FIGURE 3: CAMPAIGN MEDIA RUNNING CONSISTENTLY THROUGHOUT THE YEAR

 
 

FIGURE 4: BT'S SHARE OF THE ABOVE�THE�LINE TELECOM'S SPEND

Source: MMS
 
 

FIGURE 5: INDEXED SHARE OF MIND (100 MEANS SHARE OF MIND = SHARE OF VOICE), 4�MONTHLY ROLLING DATA 

Source: BMRB COS Monitor
 
 

FIGURE 6: PROMPTED TV RECALL � TOP 10. BASE: FIRST SHOWINGS

Source: BMRB COS Monitor
 
 

FIGURE 7: BRAND PERCEPTIONS �THE ADVERTISING MADE ME THINK THAT...

Source: BMRB COS Monitor
 
 

FIGURE 8: PURCHASE INTENTIONS � THE ADVERTISING MADE ME THINK ABOUT...

Source: BMRB COS Monitor
 
 

FIGURE 9: PURCHASE INTENTIONS � THE ADVERTISING MADE ME THINK ABOUT...

Source: BMRB COS Monitor
 
 

FIGURE 10: LIKELIHOOD OF ACCESSING INTERNET IN NEXT 3�12 MONTHS.

Base: all adults who do not personally access the internet at home
Source: BMRB COS Monitor
 
 

FIGURE 11: LIKELIHOOD OF SWITCHING ISP IN THE NEXT 3�12 MONTHS

Source: BMRB COS Monitor
 
 

FIGURE 12: BT click.com

Source: BT leB
 
 

FIGURE 13: BT INTERNET ACTIVE USERS

Source: BT leB