WSJ. Iridium Is Slashing Its Ad Budget As Phones Encounter Problems
July 26, 1999
Advertising
Iridium Is Slashing Its Ad Budget
As Phones Encounter Problems
By KATHRYN KRANHOLD
Staff Reporter of THE WALL STREET JOURNAL
Iridium to planet Earth: "Our advertising budget has dried up."
Showing that even the splashiest ad campaign can't make a world-beater
out of a problematic product, Washington, D.C.-based Iridium LLC is
slashing its advertising budget to around $12 million for 1999, according to
industry people. Quite a comedown for an upstart satellite-phone company
that just a year ago launched a splashy, $145 million campaign around the
globe with the grand words, "Calling Planet Earth."
Iridium officials praised the advertising
campaign. Iridium also insisted the $12 million
is too low, but declined to offer a different
figure and said the budget "isn't locked in."
Additionally, Interpublic Group's Ammirati
Puris Lintas won't any longer be the agency of
record. People familiar with the account say
Iridium is trying to figure out how to continue
branding the product, but to a more narrow
audience.
"We are refocusing our marketing strategy,"
an Iridium spokeswoman said, with an eye to
targeting users such as those in the military,
government and oil and natural-gas businesses. As for whether to keep
running television and radio ads, she said, "we're going to assess that."
With a $4 billion investment from a group of telecommunications
companies including Motorola, Iridium began offering its wireless global
cellular phone in October 1998, a month behind schedule because of
technical problems. The brick-sized telephones, priced at about $2,300,
allow customers to make calls from the most remote places on Earth. But
customer complaints about bad connections have dogged Iridium.
In June, the company let go about 15% of its staff, including many
executives involved in the marketing of the service. Iridium wanted to have
500,000 users by the end of 1999, but has about 15,000 users.
In recent weeks, the company's biggest backer and general contractor,
Motorola, warned that the Iridium project might be forced to close down
unless a restructuring agreement could be reached for both investors and
creditors. But Iridium has vowed to stay alive.
Iridium went all-out when it launched the Ammirati ad campaign back in
June 1998. The campaign, directed mostly at business travelers, was
considered one of the biggest global blitzes to date for a consumer
product, with spots on television and radio and in print in some 45
countries.
In one ad, showing a trail of footprints leading into the desert, the copy
read: "It will impress people. Assuming there's anyone around to impress."
Another ad showed a shot of a fog-shrouded mountain, with the caption:
"No place on earth can bring relaxation unless you know there's peace at
the office."
Direct mail was translated into 13 languages, and TV ads ran on 17
different airlines. There was also a sophisticated Web page dedicated to
the satellite phone. At airports, Iridium set up booths in executive lounges
so travelers could hand-test the telephones.
Earlier this year, the Iridium campaign started winding down. People
familiar with the account say the campaign now is set to all but disappear
except for in a few trade publications.
* * *
LEGAL SNIT ENDS between former allies D'Arcy and Gateway.
MacManus Group's D'Arcy Masius Benton & Bowles and its former
client Gateway have settled D'Arcy's lawsuit against the
personal-computer maker over its switch to another ad agency last year.
Terms of the out-of-court settlement, reached earlier this month, weren't
disclosed. Both sides characterized the settlement as amicable.
D'Arcy had sued in June 1998 in federal court in Manhattan, seeking at
least $9 million in damages and saying Gateway breached its contract with
D'Arcy when it moved its estimated $90 million-a-year ad account to
Interpublic Group's McCann-Erickson Advertising nine months before its
deal with D'Arcy expired. The agency alleged that Gateway's then-new
president Jeffrey Weitzen wanted to work with McCann, with whom he
had worked when he was an executive at AT&T Corp.
In court papers, Gateway has maintained that it never actually signed a
final contract with D'Arcy and so it hadn't breached anything by moving its
account.
--Michael Rapoport
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