Tech vendors from Nortel to Cisco routing ads to general audiences
By Vikas Bajaj / The Dallas Morning News
Itching to run out and buy a piece of that "new high-performance Internet" Nortel Networks Corp. says it's building? Chances are you won't find it in Best Buy, Circuit City, Fry's Electronics or any other retailer.
That's because Nortel isn't tying to sell to you, Jane and Joe Consumer. Not unless you happen to be an executive at a phone company or a sizable business.
Technology companies such as Nortel, Cisco Systems Inc. and Alcatel SA are spending millions of dollars on advertising that reaches a broad audience. What makes these campaigns interesting is that their sponsors derive most of their revenue by selling products to other businesses, not consumers.
That may explain why ads that preach the wonders of "converged networks" and "voice over IP" (Internet Protocol) are cryptic to average consumers. So why are these companies spending millions to get their message in front of average Americans?
They want to influence executives who make purchasing decisions about telecommunications and Internet equipment and happen to be watching college football or Larry King Live, industry officials say. Exposure to average consumers, investors and employees is a nice side benefit.
"It's part of an overarching brand-building campaign," said Jeffrey Kagan, an independent telecommunications analyst. "It's not good enough to advertise just in the trade journals. You have to reach the people who are buying in a variety of places with a variety of impressions."
The heated competition between Nortel, Cisco, Lucent Technologies Inc. and others also plays into the campaigns. The firms are racing to develop and sell equipment to phone companies and corporations that are spending billions on network upgrades.
Nortel, the Canadian company with U.S. headquarters in Richardson, says it likes having a more recognizable brand among consumers, but its main goal is to make money.
"We want people to buy more Nortel Networks gear," said chief marketing officer Charles A. Childers. "That's the whole purpose of the marketing."
Nortel says its ad campaign has increased awareness among customers and driven sales on its Web site.
"In the past year, we have seen awareness of Nortel Networks double," Mr. Childers said. "But more important than awareness is consideration to purchase. We have seen a significant increase in consideration to purchase based on advertising."
But buyers of phone and Internet equipment say advertising plays a negligible role in their decision making.
Dana Crowne, chief technology officer and senior vice president at Dallas-based Allegiance Telecom Inc., said his engineers tirelessly pore over machines from competing vendors before they make a purchasing decision. Advertisements are a distraction at best. Allegiance sells phone and Internet services to small and medium-size businesses.
"It's highly unlikely that any of our engineers learned that Cisco was the primary provider to the Internet backbone from a TV commercial," Mr. Crowne said.
But that hasn't stopped companies from launching big campaigns.
Ericsson Inc., the Swedish company with U.S. headquarters in Richardson, unveiled its first worldwide corporate advertising campaign in October to tell consumers and decision makers about its plans to bring the Internet to wireless devices.
Consumers are already familiar with the company's mobile phones, but Ericsson's chief business is selling wireless networks to carriers. The campaign doesn't plug specific phones. Instead it tries to sell viewers on the corporate vision.
In one ad, two men are traveling across a mountain ridge in a truck. The driver questions the passenger about how the mobile Internet will change his life. The answer: It will make some things better and leave unchanged the simple pleasures of life.
"It would be pretty difficult for your average person to understand everything Ericsson does," said Paula Callenbach, director of brand marketing for North America. "This will address that."
Advertising experts say all these campaigns have one unifying theme â€“ the Internet.
"They would like to be thought of as the backbone of the Internet," said John Perry, group account director and vice president at GSD&M, an Austin ad agency.
"To the general consumer, the Internet is the sites that they go to. ... It's going to be hard for [telecommunications] companies to say they own the Internet."
Mr. Perry said telecommunications companies are borrowing a page from Intel Corp.'s play book. Intel, which supplies processors to computer companies, successfully built awareness with its "Intel inside" campaign. The strategy was so effective that consumers were willing to pay more for a computer with an Intel chip than a machine that came with a competing brand.
Public awareness can also be critical for companies' stock prices, Mr. Perry said.
Cisco's ads have played a part in making it a tech trendsetter, said Jere King, vice president of Cisco's worldwide marketing communications.
"Market share follows mind share if we deliver on our promise to our customers," Ms. King said. "To date, we have been rewarded with one of the highest market capitalizations in the world."
Cisco launched an ad campaign in October that stresses the company's experience in data networking. Cisco's previous campaign featured children from across the world asking, "Are you ready?"
The ads are key to companies' broader strategies, experts say.
Nortel uses the advertising to tell people it's no longer just a telecommunications equipment maker. Cisco wants to tell phone companies that it's making equipment for them.
Alcatel SA, the French company with U.S. headquarters in Plano, wants to gain market share in North America.
The confident tone of the ads belie the competitive pressure large equipment vendors are under, said Mike Jaffe, vice president of operations at Allied Riser Communications, which sells Internet services to businesses.
"They are getting a little nervous about the little guys that are chomping at their heels," Mr. Jaffe said. "I suspect it's the little guys that we used to laugh at, and they are now scaring the Nortels and Ciscos."