Globalstar Promises to Go 'Above And Beyond' Where Rivals Failed
By KATHRYN KRANHOLD and ANDY PASZTOR
Staff Reporters of THE WALL STREET JOURNAL
The Wall Street Journal Interactive Edition -- February 24, 2000
Globalstar Telecommunications ramps up its satellite-based commercial telephone service next week with a boost from a $60 million global advertising campaign. But can Globalstar deliver on the campaign's promise to go "Above and Beyond" what its competition has failed to do so far?
Globalstar, which is 45%-owned by Loral Space & Communications, has had to overcome hurdles including the destruction of 12 of its satellites in a 1998 launch. Last year, the collapse of rival Iridium painted a bleak picture for the infant industry. Iridium, which is now in bankruptcy proceedings, spent about $120 million on its campaign, "Calling Planet Earth," but the ads revved up before many phones were actually in the field. The service never took off amid complaints of poor voice quality and steep prices for the phone equipment.
Now, Globalstar, San Jose, Calif., is beginning widespread service with a phone that is smaller and -- at $1,200 -- cheaper to buy, compared with over $3,000 for Iridium's phone. Throughout the development of the new campaign, the strategy of both Globalstar and its agency, Grey Advertising, has been to differentiate the company and its offering from Iridium.
Grey Chairman and President Edward Meyer described Iridium's campaign, which was shot in sepia tones, showing desolate lands and focusing on the difficulty of traveling alone and without a telephone, as "dark," while the Globalstar effort tries to be expansive. "One is celebratory, the other is almost depressing." Iridium declined to comment on its ads.
The Globalstar campaign features footage from small villages in New Zealand and Argentina to major cities such as Shanghai and Buenos Aires. Grey Senior Creative Director Rob Baiocco spent six weeks shooting the footage showing workers using the telephone in a variety of situations. There are shots of the Andes, a Prague plaza, a vineyard in the Czech Republic, a canoe paddling down a river near Shanghai, a soccer field in Argentina and a four-by-four driving through the desert in Namibia.
A voice-over tells consumers that satellite-telephone service "lets you go beyond cellular and speak from places all over the world. A single simple phone provides both satellite and cellular service with a clear, reliable connection." It closes with "Globalstar, Above and Beyond."
The 30-second television spots, which will air around the world, including Russia, Latin America and China, will begin in the U.S. Monday on cable networks CNN, CNBC and ESPN, among others. Globalstar is targeting business travelers, the yachting set, governments, and businesses such as maritime and mining companies. A print campaign is already appearing in a variety of publications, which will include the Economist, Forbes, Fortune and The Wall Street Journal.
But will consumers buy it? Globalstar executives estimate there are about 40 million people out there who are in need of such satellite service; Globalstar's service has the capacity to handle around 7.5 million users.
Loral Chairman Bernard Schwartz says Globalstar will be "an outstanding success operationally, financially and in return to shareholders" if it reaches three million subscribers over several years, while breaking even before taxes requires about one million users. Mr. Schwartz estimates that the service will have about 500,000 subscribers by year end, although some analysts put the expected number at only about 300,000.
"If we're right about the market, then everything else will fall into place," Mr. Schwartz said.
To help market the phone, Globalstar is counting on its 12 investor partners, which include major telecommunication companies in China, Russia and Europe. For example, Telecommunications par Satellites Mobiles, owned by France Telecom and equipment maker Alcatel, will kick in money to bolster the Globalstar ad budget to air commercials in Globalstar markets where the French company operates.
At the same time, local Grey shops will tailor the spot to specific regions. In Brazil, that might mean substituting more shots of soccer or the Andes for boating in China. The music and language will also be changed, depending on the country.
Ad Notes ...
BRIEFS: Interpublic Group's DraftWorldwide said it acquired some divisions of Groupe Everest, a Toronto-based marketing agency. Draft picked up the majority of Groupe Everest holdings, including a graphic-design unit, production studio, multimedia unit and its direct-marketing arm, said Perry Miele, president of DraftWorldwide International Group. The deal gives Groupe Everest access to DraftWorldwide's direct-marketing and promotion services. Major clients of Groupe Everest include Molson Brewery and Honda Dealer Association. ... D'Arcy Masius Benton & Bowles, a unit of DBM, is going after financial and business clients by launching Masius, a New York ad shop. The agency will be a part of DMB&B Financial in London, which will also change its name to Masius. Rebecca Tudor-Foley, a former creative director at Omnicom Group's Doremus, has been named managing director of the new concern. ... Blue Martini Software, a maker of Internet software in San Mateo, Calif., appointed Ed Vick, chairman of Young & Rubicam, to the company's board.
Write to Kathryn Kranhold at kathryn.kranhold@wsj.com and Andy Pasztor at andy.pasztor@wsj.com
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