Telco marketing 'stuck in the past'

Telecoms companies need to double their marketing budgets and become more strategic in their approach to promoting themselves if they are to compete successfully with premier brands, such as Google, eBay and Apple, a new report has warned. 

The stark message to telcos follows research conducted by analyst firm Ovum. 

"Branding will become critical in the battle between telcos and premier e-brands," said Mike Cansfield, telecoms strategy practice leader at Ovum.

"As new entrants can offer services as easily as traditional telcos, and the range of services increases, the importance of having a trusted brand will rise. Telcos need to become the brand of choice rather than of necessity."

Despite the millions spent by mobile and fixed-line operators on high-profile advertising, marketing by telcos is "stuck in the past", according to Cansfield, with little to distinguish the campaigns of incumbents from those of their challengers.

"Challengers' marketing is simply to offer the incumbent's services minus x per cent - 'me-too' but a bit cheaper," he said.

The traditional telcos' engineering roots means that they still sell technology rather than customer benefits, the analyst warned.

Their vertical product-based internal structures also means that marketing has been a subset of product management and never been regarded as strategic.

While the great service innovations of the past few years have come from the likes of YouTube, MySpace and eBay, telcos have concentrated on 'lines and calls' commodities. 

"Telcos' attitudes tend to be: 'I've given you a private circuit, what more do you want?'. But they need to understand the way users work and interact with colleagues and the way users interact socially, and to offer services based on that understanding," said Cansfield.

Marketing ABCs, such as customer segmentation, seem to have passed telcos by, Ovum's research shows. "Offering vanilla services to everyone is probably unsustainable," warned Cansfield.

The availability of precise customer behaviour data changes marketing from a mass-market to a targeted function.

The potential opportunities this creates for telcos to become the advertising medium of choice are hugely significant, Ovum's research predicts.

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