Wednesday, August 15, 2007

Death of a Brand

I remember in the late 80's when Montgomery Wards was having financial problems. They embarked on an advertising campaign called "Brand Central" where the front entrance of the store featured the names of all the brands inside, prominently displayed. My first thought was, wow, Montgomery Wards must have NEGATIVE brand equity. They felt that their name was driving away customers, and instead they put up the names of their products. Montgomery Wards went bankrupt, as everyone knows, and now their former HQ in River North is a chic high rise called the "Montgomery" and hipsters hang out in the remodeled former catalog facility nearby, which has high end restaurants and a health club.

This sign, broadly defined, signifies the same damaged brand name - in this case, AT&T. Comcast is using AT&T as a synonym for poor service and high prices - assuming that leaving AT&T would be a "plus" for their customers. I won't comment here on Comcast as the pot calling the kettle black...

The real sadness here is that in AT&T's history they had one of the greatest brand comebacks in history. At one point in the early 20th century AT&T's name was mud and they were in danger of being nationalized as a great monopoly. AT&T was reviled by customers as a robber barron. In an article in Atlantic Monthly (an excellent publication) titled "How Big Business Got a Soul":
"Vail's strategy was to launch the first, and perhaps the longest institutional advertising campaign of the twentieth century, in order to change AT&T's corporate image from detested monopoly to servant of the people. In a series of monthly magazine advertisements in a homey populist style, AT&T defended its goal of monopolizing the phone system as a natural one, the necessary guarantor of "universal service" through a "single system." Other ads followed, depicting heroic telephone linemen fighting blizzards, and comely telephone operators weaving strands of speech through "the magic loom of the Bell System," to quote from the ad's lush copy."
Even today utilities (who are the heir to AT&T's monopoly position) feature ads with the workers outside in the cold struggling to restore service after a storm. These ads are the direct heir to these campaigns, which were very effective in changing public perceptions.

When I was working in the utility industry we faced this challenge of sorts whenever the utility would attempt to sell "non-regulated services". These services included energy management or other services for the home beyond basic power or gas service. The customers hated the local utility to the point where the name of the utility was a distinct detriment to business; in fact "anyone but the utility" was preferable. The utility managers, however, generally plowed on into these unprofitable businesses (which were mostly unplugged later, to use a bad pun), compounding their foul and negative brand recognition with a general ineptitude for non-regulated businesses. By non-regulated, I mean businesses where a profit was not guaranteed and customers have a choice of suppliers.

For AT&T, by contrast, the fall is compounded by the effort that they put into building a global brand. At least they can blame the government for a failed deregulation effort that was memorably spoofed (100% factually correctly, by the way) in this clip.

Cross posted at Chicago Boyz

1 comment:

Dan from Madison said...

"The T1000 of corporations" - damn Colbert has great writers.