A Clever Ad Campaign That Backfired on the Ad Agency
April 12, 2011
General Telephone was a rival to the Bell phone system. It was not an effective rival.
Sometime around 1951, we moved to a town that had GTE. I knew by age 9 that GTE's service was bad compared to Bell's. When a 9-year-old knows, the company has an image problem. But it did not have a marketing problem.
The old system was based on regulation by the Federal Communications Commission. Companies were granted regional monopolies. That taught me early that Federal regulation did not work well for customers.
On 1970, GTE tried to recover its image. It began running an ad campaign in Los Angeles County that admitted what everyone in GTE's areas already knew: the company delivered rotten service. The campaign was so off-the-wall that Time Magazine ran a story on it.
The ads were pulled off the air by management within weeks. The ads could not increase the company's income. GTE had a monopoly. The ads made GTE's performance look bad. Managers did not want to be laughed at. One of the commercials featured a man at a dinner party who is asked what he does for a living. He says he works for GTE. The sound of derisive laughter fills the room.
The ad agency forget the #1 rule of advertising: you must sell management on the ads. When the ads cannot increase revenue, then there is no reason to expect managers to stick with an ad that undermines their self-image. The campaign caught flak from lower-level managers. Senior managers killed the campaign.
If an ad cannot increase market share or profits, why pay for it? Because senior management thinks it can promotes the firm. They see the ad on TV or in a magazine, and it makes them look good. They get some glory. This ad gave them no glory. It made them look bad.
The agency forgot to ask: Why is buyer paying for the ads? Ads that do not make senior managers richer had better make them look good.
The ad agency was too clever. It wanted to make an ad that would impress other people in the advertising world. Getting the campaign dropped was not what they had in mind.
But I never forgot this ad.
Today, the company is Verizon. It is a classic case of a large company that turned itself around in a competitive environment with much less government regulation.