BT puts faith in marketing

While news of Ian Livingston’s elevation to the top job at BT dominated the headlines last week, two marketers were also digesting news of significant promotions.

Consumer division chief Gavin Patterson was immediately confirmed as Livingston’s replacement in the role of chief executive of BT Retail (MW last week), while chief operating officer John Petter succeeds Patterson as consumer managing director (MW.co.uk April 10).

The moves finally give marketing a significant voice at BT’s top table. Patterson and Petter both held senior marketing roles at Procter & Gamble and Telewest before joining BT within months of each other in 2004. They have since had overall control of BT’s marketing strategy and are behind the company’s long-running “Adam family” ad campaign featuring actor Kris Marshall.

Ovum telecoms strategy practice leader Mike Cansfield says: “BT has been great at advertising and spending money on advertising but generally quite poor at marketing. They are at last getting some senior marketing representation at the highest level of the company but BT has 100,000 staff and three people [Livingston’s background is at marketing-oriented Dixons] can’t do it by themselves. I would suggest they need many more.”
Cansfield believes marketing is becoming increasingly important in telecoms and media as convergence pitches giants from previously non-competing sectors against one another: “BT faces competition from brands such as Apple, Google, Carphone Warehouse and potentially Tesco.” He adds: “As a result, branding and marketing becomes critical for the future of BT. If customers start thinking that communications equals Apple or Carphone Warehouse then BT is done for.”

The BT brand suffered a blow last week when the company was named the UK’s worst landline provider in a customer satisfaction poll by price comparison site uSwitch. But speaking exclusively to Marketing Week, Petter calls the survey “highly misleading” and adds: “Our customer service is still stronger than our competitors on the whole. It’s the thing I have put most of my time and effort into.”

Petter admits further improvement to customer service is his top priority in his new role, while maintaining the company’s position as the UK’s leading broadband provider will be another area of focus. BT had a 27% share of the broadband market at the end of 2007, according to Strategy Analytics, ahead of Virgin Media (23.5%) and Carphone Warehouse (16.5%), which launched “free” broadband in 2006 for customers who signed up to its TalkTalk fixed-line service.

Petter says he is particularly proud to have grown BT’s broadband market share in the face of “notionally” free broadband from some of its rivals. He also refutes suggestions that he dislikes the “Adam” activity, which tells the everyday story of the Marshall character, his girlfriend Jane and her two children.

“The campaign is working – if it wasn’t we would have scrapped it,” he says. “It’s been going almost three years and has done very well for us. There is something true about the ads in terms of modern family life in this country. They take technology and demystify it.”

The campaign was created by Abbott Mead Vickers.BBDO, which was appointed to handle BT’s consumer advertising business in 2005 (MW June 2, 2005). Chairman Cilla Snowball calls Patterson and Petter “two stars within BT and within marketing” and adds: “They are individually and collectively great to work with. They set clear goals and expect high standards and they make it very clear when you fail to deliver that in an effective manner.”

That demanding style has ruffled some feathers at BT over the years but former head of brand experience Jan Gooding says everything the two of them do is for customers’ “absolute benefit”.

Patterson and Petter’s close working relationship, coupled with their complementary skills, makes them a powerful combination, believes Gooding. “It’s very unusual to get two people who are each other’s strengths and weaknesses,” she says. “Gavin [Patterson] leads by example and doesn’t ask anyone to work harder than he does. He creates quite an intimate feeling, whereas John [Petter] is all about business and figures. He’s not at all sentimental about relationships but both are incredible marketing people who are showing that if you make the customer your key focus you can rise to the top of a business.”

The two will be putting much of their energy into BT’s on-demand television service BT Vision. With just over 200,000 users, it has some way to go before it reaches its 2-3 million target by 2010, but Petter says BT is “very bullish” about the service.

BT Vision is aimed at people who want more than Freeview but do not want to tie themselves to expensive subscription packages, offering services such as pay-per-view on-demand content rather than monthly contracts. Petter adds: “People are becoming more selective about what they watch. Programming is much more segmented and that plays into our hands.”

Enders Analysis says it was “very sceptical” about BT Vision when it was launched at the end of 2006 because it was so reliant on content. Research analyst Adam Rumley admits BT has done a “very good job” with content, but points out that much of it is not exclusive to BT Vision. “Because it doesn’t have the audience it can’t justify the investment in content but exclusive content will attract more people,” he says.

Under chief executive Ben Verwaayen, BT has been transformed from a lumbering fixed-line telecoms company into a broadband giant with interests in everything from international IT services to on-demand television.Among the wider challenges for BT, and Livingston in particular, will be improving the company’s share price, which dropped by a third after revenue growth fell short of expectations. But the promotions of Patterson and Petter to two of the most senior positions in BT are recognition that marketing has a fundamental role to play in the future of the business.