TPSA steps up ad campaign to battle smaller upstarts
By : Robert Wylot
Media and advertising companies aren't getting the boon in advertising revenues they expected from the introduction of two new domestic-long-distance (DLD) carriers this summer. But all may not be lost. The emergence of upstarts Niezalezny Operator Miedzystrefowy (NOM) and Netia 1 (http://www.netia.pl) on the telecom scene has led monopolistic Telekomunikacja Polska (TPSA) (http://www.tpsa.pl) to increase advertising for its own long-distance service. The result is a small-scale war; to the victor go the nation's long-distance customers.
NOM and Netia 1, which have set out to dismantle TPSA's monopoly on the DLD market, cite multiple reasons for not spending money on advertising. Their customer demand exceeds their current capacity. They have limited finances. Media coverage surrounding them has proved them with a public-relations boost. And, not least of all, customers are desperate to leave the national telecom operator.
In return, TPSA has stepped up advertising spending in promotion of its long-distance service. According to advertisement market watcher Expert Monitor (http://www.expert.wroc.pl), TPSA has spent zl. 26 million ($6.2 million) on long-distance promotion in the first half of this year, and zl. 9.8 million ($2.3 million) in July alone. In comparison, NOM spent a mere zl. 405,071 on advertising in July and Netia 1 just zl. 128,525 ($30,601) for the same month.
"Our campaign is stalled because management decided not to spend money on advertising until TPSA enables us to meet the demand by customers," said Marcin Gruszka, a spokesman for NOM. According to Gruszka, NOM's telephone lines are overloaded because TPSA is blocking the company's capacity at inter-connection points, where the new operator could connect to the national phone infrastructure managed by TPSA. "There is no chance we will start the campaign by the end of August," Gruszka said. "We won't make ourselves look ridiculous (and advertise) until we have satisfactory technical capacity."
Market watchers also point to the limited finances of the new companies as another reason for shunning advertisers. "They aren't advertising because they have too little funds," said Jerzy Trzaska, owner of Media Watch, a company that monitors the outdoor advertising industry. "If you want to spend on advertising, you first need to earn some money."
Financial limitations are particularly severe for Netia 1's parent company, Netia, whose stock has lost over 90% of its value this year.
"Netia is now very careful about its spending," said Wlodzimierz Giller, a telecom market analyst at Erste Securities brokerage house. Giller warned that Netia 1 should be careful how it spends its advertising budget, as TPSA will continue to try to block its business.
But the two entrants may not need to worry about advertising because their struggle against TPSA has received large-scale media attention. According to Malgorzata Branska, a Netia spokeswoman, the media coverage has provided the company with a strong public-relations campaign.
Edyta Lyszkowska, a spokeswoman at AGB Polska (http://www.agb.pl), a group that monitors the Polish TV market, agrees. "It doesn't matter how the message has reached the customers, what matters is that it has," she said. "Now everyone knows about the independent operators."
TPSA's spokesman Michal Potocki did not conceal his criticism toward the newcomers' tactics. "NOM has based its strategy on the belief that they will win favor by crying out against TPSA," he said.
Gruszka, however, denied that NOM has deliberately launched a public-relations campaign against TPSA. "Journalists call me constantly to ask about facts, not about advertising," he said. "I give them facts. So you can't say we've reduced our advertising in spite of anyone."
Netia's Branska, on the other hand, says the two entrants are justified in their campaign to win customers from TPSA. "People have had enough of TPSA, and they will use any other operator available," she said.
