Dumb-Ass Branding: AT&T

    On New Year’s Eve, AT&T kicked off its 23rd branding campaign since 1981.This campaign, which included TV commercials, billboards, airport signs and even a theme song by the group Oasis, represents an effort to revitalize the AT&T brand after the once venerable company was acquired by SBC Communications. The campaign will cost an estimated $800 million to $1 billion, according to the Wall Street Journal.

    What a huge waste of money. What a premier example of dumb-ass branding.

    AT&T used to have a premier world-class brand, thanks to its long heritage of supplying rock-solid phone service and cutting-edge R&D that included the development of the transistor. But the “Ma Bell” brand began to self-destruct in the early 1980s when it sought to block competition from MCI and other telecommunications upstarts. At one point it was even claiming that using modems could cause equipment in its central offices to fail.

    After the break-up of AT&T in 1984, which led to the regional Baby Bells, AT&T floundered badly. According to USA Today’s Kevin Maney, it “bought computer companies, split up again, spun off wireless, bought cable companies, bought wireless, spun off cable companies, [and] re-spun off wireless” until it was eventually bought by one of the companies it originally spun off in 1984. It launched re-branding campaign after re-branding campaign in desperate attempts to regain its cachet. Almost all were awful. Its “Carrot Top” campaign ranks right up there with Burger King’s “Herb the Nerd” as some of the worst advertising ever.

    AT&T spent money on everything but operations and customer service.  According to the U.S. FCC (Federal Communications Commission), AT&T Wireless generated the most complaints per subscriber. J.D Power & Associates rated its customer care as below average. The Florida Attorney General wrote to AT&T demanding immediate changes to an automated “customer service” system that “prevents callers from speaking with live customer service representatives and obstructs consumers from receiving refunds for improper long-distance charges.” The FCC sought to fine AT&T $780,000 for violating the federal do-not-call law.  But that’s peanuts compared to the $500 million fine it was considering because AT&T wasn’t paying fees for connecting intrastate calls or paying into the universal service fund, which subsidizes phone service for farmers and other rural residents.

    The individual customer stories are horrifying. Just google AT&T and service, and get inundated with links about AT&T slamming (connecting customers to its service without permission) and other customer abuse.

    Inevitably, customers voted with their feet. Revenues fell from nearly $50 billion in 1999 to $30.5 billion in 2004. The number of residential customers dropped 60 million to about 24 million. The customer loss rate was expected to continue at a phenomenal rate of 10% a quarter. Once, AT&T bonds were known for their “widows-and-orphans” solidity; not long ago multiple rating agencies downgraded its debt to junk-bond status.

    AT&T is a brand that deserves to die an unloved, ignomious death. Its only value is as a case study on how mistreating customers will kill even the most dominant brand.  So why is an estimated $1 billion being spent? “This campaign is expecting to introduce the new AT&T to a whole new generation of customers,” says Karen Jennings, AT&T’s senior executive vice president for human resources and communications.

    Translation: We are looking for more people, first to sucker, then to anger.