Tuesday, December 30, 2008

Sprint Ad Spending Soars

From "The Street":

Not all companies are slashing advertising spending. Sprint is on track to outspend its larger wireless rivals AT&T and Verizon this month in an effort to reverse its alarming subscriber losses.

The Overland Park, Kan., telco is buying three to four times as many TV ads in December than it normally buys in the summer months. And this week, Sprint will overtake top spender AT&T in the TV ad buying race, according to an analyst familiar with the industry's current advertising activity.

The surge in ad spending comes after Sprint swung to a loss in the third quarter on a 7% year-over-year decline in sales. The No. 3 wireless shop has lost nearly 4 million subscribers in the past year as disgruntled Nextel users tore up contracts and other carriers picked off customers with fancier phones like AT&T's Apple iPhone.

Last month, Sprint announced it was slashing costs, closing offices and offering buyouts to bring expenses in line with sagging sales.

The recent advertising push has attempted to put CEO Dan Hesse in the spotlight as a symbol of the new direction and leadership at Sprint.

Sprint has also been emphasizing its family calling plans and its lower prices to tailor its offering to a more cash-strapped customer in a faltering economy.

The move to the top of the telco TV ad buyers spending is not likely to be sustainable for Sprint, however. AT&T spends around $800 million on TV ads annually and No. 2 Verizon typically budgets around $650 million for TV ads. Sprint's annual ad budget is usually around $400 million.


Smart move. A down economy is no time to slash marketing--Sprint (and the telecom industry) already has enough problems. Fortune favors the brave, we say. An intelligent ad campaign centered on their steady leader, CEO Dan Hesse, is a smart strategic move--especially when they have been taking it on the chin from competitors for quite a while.

Disclosure: The editor of this blog owns shares in Sprint and is related to a Sprint employee.

No comments: