The college crowd: Carriers try new approaches in vying for the young adult market

Earlier in the decade, the young adult market-derided as overeducated, underemployed slacker misanthropes-was of questionable value. But the economic boom, a growing job market and telecom competition have made young adults-particularly students and recent graduates-more lucrative targets.

Telcos are approaching this actionable market as early as possible and building the image of their brands and products and services.

AT&T's latest attempt, the Campus Invasion Tour, is a $10 million campaign sponsored by MTV and featuring Rolling Stone-branded campus events to introduce young adults-many of whom are making telecom decisions for the first time-to the company's products and services. The 25-school concert tour is one component of AT&T's effort to differentiate the once-bellwether brand from an unruly moshpit of competitors. By sponsoring events with the hip cachet an MTV or Rolling Stone affords, the telco aligns itself with icons the market has come to trust.

"Students are customers for life," said June Rochford, a spokeswoman for AT&T's education markets division. "By offering great products and services, we build lifelong consumers."

Plenty is riding on understanding how young adults choose telecom service. More than 14 million students were projected to enroll in higher education institutions this year, a number expected to grow 13% by 2007, according to the National Center for Education Statistics.

The spending power of college students is estimated at more than $90 billion annually. While students' current value to telecom providers is high, their potential buying power is an equally compelling reason to attack this segment early and often during the transition into adulthood. AT&T estimates the value of the college telecom market at $9 billion.

"In general, college students are heavy consumers of communications products, " said Debra McMahon, a vice president with Mercer Management Consulting. "Much more than the average population, they buy value-added services."

However, the length of time a student stays in one location tends to be low, which makes keeping college customers difficult, McMahon said.

AT&T and other telcos have long been a presence on college campuses. But as campus campaigns lose luster with more marketers invading university walls, telecom companies marketing to college students must be creative about building consumer relationships, through both services and promotion tailored to the young adult market.

Sprint was the first telco to launch a college products Web site in 1995. Its College Foncard program has been popular with students since its promotion blitz on college campuses began. The calling card's Cool Rewards program awards heavy users rebates, travel certificates and other incentives for using Foncard. The incentives keep younger users coming back for new services after their restless college years, Sprint officials insist.

"We feel like we've done our homework on students needs, which are very different," said Janet Taylor, director of college marketing at Sprint.

Marketing to students will change dramatically in coming years, she said. While direct mail and campus tabling will continue to be primary distribution methods, telcos will need to adapt for a new generation of users.

"E-commerce is intuitively logical to college students," Taylor said. "We need to stay on the cutting edge to sell to them."

Sprint's recent partnership with Mervyn's department stores exposed a younger, pre-collegiate market to its offerings by distributing collectible prepaid calling cards emblazoned with popular musicians. Taylor also points to brick-and-mortar retail at RadioShack locations and Sprint PCS stores as more effective at reaching younger markets than telemarketing, the traditional distribution channel. By making these services affordable and accessible, the telco improves its chances of turning temporarily cash-strapped students into loyal users after graduation day, when their income potential increases and their need for long-distance, local, wireless and Internet service is apparent, McMahon said.

"There's no question, it's about brand equity building," she said. "People who go to college end up being the portion of the population that is most valuable, and the gap between valuable and unattractive consumers is widening."

AT&T has bolstered its product differentiation strategy by partnering with Student Advantage, a college discount card program that boasts 2 million members. The program's $20 membership fee is waived when students sign up for AT&T calling cards. A combined calling and discount card offers students discounts from hundreds of retailers.

"It's a win-win situation for AT&T, Student Advantage and the students themselves," said Rochford.

These kinds of promotions are just some of the many ways telcos are trying to add some variety to traditional telecom services. New entries such as dial-around long-distance service and branded collect calling-complete with campy, star-studded promotion and appeal for the transient consumer-have posed a threat to those telcos that fail to adapt to new consumers.

"[Dial-around services] are targeting the low-end consumer business," said Rich Storey, a partner in Arthur Andersen's global communications and entertainment practice. "The incremental cost to the provider is low. It is a competitive threat when competing on price [in the college market]."

To compete more effectively, telcos have designed simple but effective services for the college market. AT&T's Chat And Talk service, and Call Organizer-a personal identification number-based system that allows roommates to receive separate long-distance billing-are the kinds of value-added services that are attracting and keeping the young adult market.

"Students are developing brand loyalties, whether it's blue jeans or telephone service," said Dennis Roche, a vice president at American Passage, a marketing firm specializing in targeting young adults. "They are living away from home for the first time and having to choose a phone service. With telephone service, it's even more dramatic because younger consumers are open to new technologies."

This openness, while beneficial to new long-distance and local service entrants, means that wireless providers and paging services are vying for the same dollars. The growth of prepaid cellular phone service and inexpensive paging have been fueled in part by campaigns that target young adults whose communications needs differ from their forerunners. A study conducted by Wirthlin Worldwide, a Chicago-based research firm, shows that 84% of 18 to 25 year olds have used wireless phones, 74% have used the Internet and more than half have used a pager or prepaid phone card.

"Students are early adopters and heavy users of telecommunications services," said Taylor. "These guys are the leading indicators of the future of telecommunications, and that's why it makes sense for telcos to attract them."

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