SmarTalk Spends $31M on DRTV Campaign

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SmarTalk, Columbus, OH, is in the process of rolling out a short form DRTV ad for its prepaid cellular phone and prepaid cellular phone card. The company has been in test and company officials said the test was successful.

"In the second quarter of 1998, we have spent $31 million and the campaign has been self-liquidating," said Victor Grillo, president of SmarTalk Cellular. The term "self-liquidating" refers to when the sales generated through DRTV cover the costs of media.

"Our goal is to brand the product," Grillo said. "We are going to be the quintessential consumer brand in pre-paid telecommunications."

SmarTalk has earmarked $100 million for DRTV advertising next year. The company plans to spend $50 million in advertising for its prepaid cellular phone and another $50 million in advertising for its pre-paid cellular calling cards.

"We are the first telecommunications company to use direct response to build brand awareness," Grillo said.

Dick Clark is the spokesperson for the product in the DRTV spots. "He appeals to all demographics," Grillo said. "That's why we chose him."

To help build brand awareness, SmarTalk entered into a strategic alliance with National Media Corp., Encino, CA, the largest infomercial marketer in the world. In the alliance, National Media will designate three to 10 seconds of each of its infomercials to plug SmarTalk's prepaid cellular card. Grillo said viewers who purchase infomercial products will also receive a calling card as part of a free offer.

National Media also will allow consumers who redeem SmarTalks cellular calling cards to join its Everything4Less buying club, an online shopping service that sells products for wholesale prices. SmarTalk will also have the opportunity to sell its core products to National Media's customers.

Company officials said the alliance has the potential expose the prepaid cellular products to approximately 1.8 million consumers. SmarTalk, anticipating an overwhelming response to the campaign built a 120-seat call center in Framingham , MA. Grillo said the center is receiving 500,000 calls a month from consumers.

"Jordan Whitney [a DRTV monitoring service] has named our short form spot number one for the past 10 weeks," said Grillo. "This has never been done by any other direct response short form spot."

SmarTalk chose the direct response route for its advertising because of the cost effectiveness DRTV provides, and its ability to drive retail sales. The pre-paid phone, which is manufactured by Philips Consumer Electronics NV, Atlanta, exclusively for SmarTalk is available in several retail outlets including Kmart and Service Merchandise.

When purchased through television, the product costs $99 distributed through three payments. Its prepaid calling cards, which are needed to make the phone work, come in increments of $20, $40 and $75. The free give-away SmarTalk provides is a leather case for the phone, valued at $20.

Grillo squelched rumors that stemmed from litigation that the DRTV spots were delayed.

In addition to providing cellular services, SmarTalk is also a distributor of regular pre-paid calling cards, as well. The company also maintains distribution agreements with the United States Postal Service and leading mass merchandisers.

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