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Forbescom - Magazine Article Powered By Docstoc - Magazine Article                                                                                04/10/2006 12:53 PM

A Battered Brand, Reborn
Tim Doyle 04.24.06

Edward E. Whitacre Jr. aims to revive the AT&T name--by abandoning sibling brands that cost billions of dollars
to build.

Edward E. Whitacre Jr. has a soft spot for the beaten-down brand that is AT&T. He joined the 130-year-old company as
an engineer in 1963 and left it two decades later to stay with Southwestern Bell, one of seven Bell local-service
companies that the feds broke off from AT&T in 1984. He became the Baby Bell's chief in 1990, renamed it SBC in 1995-
-and has spent upward of $200 billion of shareholders' money to reassemble much of the AT&T he had left behind.

By early next year Whitacre's reanimation will be all but complete, when the deal closes for its $65.5 billion purchase of
BellSouth on top of SBC's $16.5 billion buyout last fall of the old AT&T long-distance business. Of the nine distinct
companies that once bore the brand of AT&T, Whitacre will control six of them. Fittingly, he jettisoned the SBC name last
fall in favor of his beloved icon, albeit this time lowercase: at&t.

The new-old AT&T, with $120 billion in annual sales, will be the largest telecom company in the world. It has begun a
billion-dollar ad blitz that ranks as the biggest in the brand's history. The effort includes a dozen new TV spots, 32 print
ads, sponsorship of the Masters (golf) and, until recently, a slick billboard in Times Square. Campaign tagline: "Your
world. Delivered," which gets tweaked for Internet ads. ("Blogging. Delivered.") Theme song: "All Around the World," the
1997 pop hit by Oasis, the British band and Beatles doppelgänger.

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Ad spending could hit $2 billion in 2007 if the BellSouth deal wins approval, as expected, ranking AT&T with some of the
nation's biggest advertisers, such as General Motors and Procter & Gamble.

But Whitacre's embrace of the brand at&t is even more costly than that, for he is abandoning others that collectively have
racked up billions of dollars in ad spending in recent years: SBC, BellSouth and one of the most heavily promoted new
tech brands of all--Cingular. A daunting $10.5 billion was spent over five years promoting these three names, all of which
now will disappear. Last year BellSouth and Cingular had higher brand-loyalty ratings than AT&T, says Brand Keys.

Cingular, which had been owned by SBC and BellSouth, spent $1.3 billion on ads last year, a 44% increase, says ad
tracker TNS Media Intelligence. It has 54 million customers. Now Whitacre is scrapping the Cingular name altogether in
favor of at&t. Yet the old AT&T Wireless, which Cingular bought for $41 billion in 2004, was plagued with high customer
quit rates, quality complaints and marketing woes. Cingular had chosen to douse that tarnished name. Now it's back.

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"It's a recipe for confusion," says Karl Barnhart, managing director at CoreBrand, which had consulted to AT&T (the long-
distance progenitor) until its merger with the former SBC last fall. "It's going to be tougher for them to rebuild the AT&T
Wireless brand," he says. "Consumers have very short attention spans."

"If you spend enough money, you can get by that," counters Whitacre. That should be quite comforting to AT&T's ad
agencies, GSD&M, a unit of Omnicom Group, and Rodgers Townsend, but less so to BBDO, the Omnicom ad shop that
so prominently promoted the destined-for-death Cingular brand, and WPP Group's Grey Worldwide, which ran BellSouth's
$128 million ad budget last year.                                                                 Page 1 of 2 - Magazine Article                                                                                04/10/2006 12:53 PM

Whitacre's rush to bet it all on at&t harks back to the days when the brand was monolithic, ubiquitous and beloved:
"Reach out and touch someone," launched by ad shop N.W. Ayer in 1981, anchored ads that were keenly emotive (or
schmaltzy). But in later years the AT&T name was better known for mishaps and melodrama--three breakups (two of
them self-imposed), the ousting of a longtime chairman (Robert E. Allen), the fiasco of a hired-then-fired successor (John
R. Walter) and the ill-fated finale of ex-IBMer C. Michael Armstrong, who took over in 1997 and unwisely plowed $116
billion into cable systems. (The new AT&T owns no cable systems at all.) The company bowed out of the consumer
market in 2004.

But the AT&T name, even battered as it is, was instantly better than the SBC brand that Whitacre's company had built at
a cost of $1.5 billion over four years. Brand research that SBC commissioned last year showed that its moniker had no
clout overseas. Even in the U.S., where SBC flacked itself at a cost of $314 million last year, recognition for local phone
service outside its 13-state base was low: Some people guessed SBC stood for Southern Baptist Conference or Seattle's
Best Coffee.

So, Whitacre made the call: "We're just going to call it AT&T and do it," he told his marketing team last June. But he
insisted on updating what he calls "the Death Star," AT&T's old logo. When Interbrand, an Omnicom-owned marketing
consultancy, suggested using lowercase type to make the company's tag more accessible, Whitacre fretted. "I agonized
over using large or small letters."

The rebranding and resurrection of "at&t" is so sweeping that all customer bills--some 30 million monthly notices for
various services--will be revised to bear only the new lowercase brand. Why not simply tack on the new parent name but
also let customers in the nine states that BellSouth serves continue getting the same branded bills they have seen for
more than 20 years? Whitacre wants to avoid confusion--and save $500 million by promoting just one brand.

Ads for the new AT&T play up the old Ma Bell's history as an innovator (it developed the transistor, laser and cell phone).
One TV spot talks up AT&T's invention, in 1939, of the first talking computer and links it to today's in-car voice-navigation
systems (never mind that, um, AT&T doesn't make or sell them).

Some marketing experts say the first run of ads fails to spell out how "the new AT&T" is different from the brand that
endured so many travails. "It doesn't leave a message," says Al P. Ries, a consultant in Atlanta. "They haven't figured out
what they are going to say."

New ads breaking now trumpet the San Antonio company's specific services and features. One commercial pitches
AT&T's Internet phone capabilities by showing teenagers partying at a friend's house while his parents are away. The
revelry halts when the kid realizes his mom is calling on the home phone. All is well until she hears a sound in the
background, thanks to the clear connection. "Is that confetti?" she asks suspiciously.

"The chairman," as Ed Whitacre is called throughout the company, knows he is placing a huge bet on his new-old brand.
Says he: "Everything is at stake."

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