Sprint rebuilds its brand with ads

Ad spending by the four largest wireless carriers – Verizon, AT&T, Sprint and T-Mobile – fell for the first time ever in 2008, dropping 7.0% from 2007 levels, according to Bernstein Research. Of the four, Sprint cut back the most, although it aggressively reversed the trend in the fourth quarter and is now ditching CEO Dan Hesse's campaign for a focus on the network and consumer value.

Sprint's two new TV advertising campaigns ask wireless users timely questions, then give them the answers in the same short spot. In the first campaign, Now Network, the carrier is focusing on those consumers who use the mobile phone for social networking, emailing and other network-intensive uses. For the second value-focused campaign, Sprint will target AT&T and Verizon customers looking to save money with exaggerated scenes of people throwing away their money.

Sprint has a nationwide 3G network and plans to roll out its 4G WiMax technology with Clearwire to 10 additional markets this year. Its line of brand-focused ads will also appear online in homepage takeovers on YouTube, Yahoo, MSN and AOL, in select print outlets and on nationwide billboards.

"It can be argued that Sprint is virtually ‘starting over' in rebuilding its brand," according to Bernstein Research senior analyst Craig Moffett. He described Sprint's aggressive approach to advertising as a necessary prerequisite for improvement, although it is unclear if it will help. That is because it is also unclear whether an increase in ad spending precedes subscriber growth or follows it. Brand advertising, like Sprint is doing with its TV commercials, has a relatively long cycle in terms of pay offs, Moffett said, whereas promotional ads in newspapers or direct mail tend to have a short half-life but quick returns. 

"The huge increase in Sprint's ad spending in Q4 can be viewed as the glass being half full…or half empty," Moffett said in a research note.  "The half-full view is that Sprint's spending on its brand is a precursor to better gross additions ahead, as their brand advertising ‘takes hold.' The half-empty view is that, at least in the very short term, all this spending on subsidies and advertising didn't work, at least in Q4."

Sprint's Q4 media mix was heavy skewed to the TV with spending reduced on the shorter term outlets. The carrier ramped up its ad campaign starring Hesse in Q4, hoping to see its benefits in churn reduction this year, but Hesse also said at the time that'd he like to discontinue that particular campaign without losing consistency across Sprint ads. The new ad campaigns come as studies show that consumers are losing their faith in CEOs as scandals and large executives' bonuses erode trust.