Marc Tonnon – Marketer, BT

B2B marketing has always created champions and experts in niche and highly specialised products or services. Business marketers are far more likely to become attached to a particular industry or community, and remain with it over long periods, moving up through company ranks or swapping to rival suppliers. This is in contrast to consumer marketing – particularly the FMCG sector, where practitioners can appear to switch between the likes of confectionery, yellow fats and frozen food at the drop of a hat.

Quite why individual B2B marketers become so attached to their area of interest is unclear; it is likely to be due to a variety of personal, professional and structural reasons. But the advantages for the employers of such individuals with their indepth knowledge are readily apparent. The only potential problem occurs when there is no such expert available to fill a role.

Fortunately for BT, when looking to reinvent its telephone directory product in 2002, just such a figure was available in the form of Marc Tonnon. Belgian-born Tonnon has spent 25 years in the directory industry across Europe and North America, making him the ideal person to take the project forwards. From his perspective, the appeal of the proposition was obvious: “BT aims to become the number one supplier of directory services in the UK,” he explains, which is no mean feat given BT’s current position. The market for paper directories is currently dominated by Yellow Pages and Thomson, who have a combined 90 per cent share. BT Phone Book, by contrast, has only a six or seven per cent share. A big challenge for BT then, for which it required one of the biggest experts in the field.

Tonnon makes no pretence that BT’s ambitious objectives can be realised in the short term. “It will probably take at least 10 years to become number one,” he says, “but I have a strong belief that it is achievable.”

The strategy for achieving this goal is three-fold, although by far the most significant element is the instigation of a classified directory within the BT Phone Book, to accompany the business and residential listings. “The Phone Book has three sections in one book – this is a key differentiator. None of our rivals [ie. Thomson Local directories and Yellow Pages] are so comprehensive,” explains Tonnon.

Crucially this turns the directory, which for so long was a loss maker for BT, into a revenue generator and a source of profit. It is a fundamental shift in the ethos of the product. Revenue is also to be derived from classified ads within the business directory section, Tonnon points out.

Distribution of phonebooks including classified began this year, and a total of 28 million have been delivered to date. “They are sent to everyone who has a phone,” which he points out is another significant change: “previously they were only sent to BT customers.” The aim is for universal coverage.

 

The second element of the reinvention of BT Phone Book is marketing, both to consumers (who will make up the bulk of the recipients and therefore users) and to potential business advertisers.

The consumer campaign was spearheaded by TV advertising which ran during August on terrestrial and digital channels, and was backed up by press advertising and so-called ‘brand experience’ events in key regional shopping centres. All activity focused on the ability of consumers to live their lives through the phone book, without ever actually having to leave their house, with regional activity, including people living in Perspex boxes which was almost certainly inspired by David Blaine’s high profile isolationist stunt in London last year. “We are committed to using above-the-line to appeal to consumers,” says Tonnon. “The aim is to encourage consumers to know, use and eventually prefer our product.” This, in turn, will encourage businesses to use it as an advertising vehicle.

As yet, there has been no specific campaign to encourage usage amongst the business community, although there will undoubtedly be residual awareness and benefits from the strength of the consumer campaign. Such activity is costly. “We will continue being very visible,” he comments, “the level of investment in marketing will be sustained.” But he is quick to add that there is no blank cheque from BT to enable the achievement of this objective. “BT has financial muscle, but the product has to generate its own finance.” And he adds, “I would rather outwit the competition, than outspend them.”

The campaign to target potential advertisers has been quite different and much lower key, focusing on direct marketing for lead generation followed up by a meeting with one of a 300-strong dedicated field sales force. “Most advertising is sold face-to-face,” explains Tonnon. “SMEs account for 80 per cent of the market,” he says, although a National Accounts Team has also been established to target big clients and agencies.

Whilst this approach may not be revolutionary, what is impressive is the fact that this team has been brought together within the last 24 months. “Two years ago, there were only four people working on BT Phone Book. Now there are over 700.” It has not only been an enormous marketing challenge, it has also been a significant feat of administration.

 

The final element of the strategy for the reinvention of BT Phone Book is in terms of targeting. The 28 million books which have been distributed since the beginning of the year are made up of 171 different regional variations, featuring local information and services, which Tonnon says is a major advantage and key selling point for advertisers. “Yellow Pages only have approximately 100 variations. We have more local books and are, therefore, more relevant.”

He says this level of coverage is constantly under research and being fine-tuned to ensure the optimum geographical coverage is achieved. “This is to ensure they reflect the latest shopping, travel and lifestyle patterns. We are monitoring this very closely.”

 

The reinvention of BT Phonebook comes at a time when the corporation is facing increasing competition on many of its traditional revenue streams, and is a demonstration of its understanding of the need to seek out new opportunities. Providing a directory service has been a longstanding provision of BT’s operating license. “It dates back to the old British Telecom’s public service ethos,” explains Tonnon. As a consequence, it could not simply scrap the loss-making directory, even if it wanted to, and it was becoming something of a milestone. The management ethos had been to strip out costs and run it as cheaply as possible. “The traditional phone book was not an attractive business,” comments Tonnon, with a large helping of understatement.

The losses accrued by the Phone Book had historically been balanced by the revenue generated by Yellow Pages, which was formerly owned by BT. But this was sold off in 2001 as part of the spirit of privatisation, leaving BT with no opportunities to leverage the considerable advertising opportunities presented by its directories.

But the corporation looked again at the Phone Book in the new millennium, realising that this liability could be turned into an asset. “Classified advertising changes the business model from cost constraint into a profit generator,” says Tonnon. Ian Harrison and Marc Tonnon were brought from Thomas International Publishing in the US to consult on the project in 2002, and were formerly appointed general manager and head of marketing & production in 2003.

 

Development plans for the Phone Book go beyond simply selling more advertising space: BT currently provides directory services through a number of routes and a key element of Tonnon’s task is to manage their evolution. Besides the paper directory product, the corporation also provides directory information via a CD-Rom and online. (Telephone directory enquiry services are also considered part of the same business unit, and are being pushed aggressively following privatisation, but fall outside Harrison and Tonnon’s remit.)

Tonnon says maintaining this portfolio of directory products is crucial for the business going forwards, and there will be no strategic move towards online delivery at the expense of other formats. “The paper product is still widely used, and has a number of advantages: the information is pre-organised; it is immediate; readers can instantly compare different offerings from a number of providers on the two page spread; and they can physically mark what is interesting.”

Similarly, although perhaps less vehemently, he denies that the CD-Rom will be phased out. “It provides the benefit of electronic searches from any location. We are still not able to provide universal access to online data, and some companies restrict their employees use of the Intenet.”

Tonnon continues, “each product will continue to have its own value, and different use amongst different demographics. We are developing a portfolio which will accommodate all delivery mechanisms. The product is the information, not the paper.”

He acknowledges that developing an enhanced online facility is a fundamental development strategy for the Phone Book. But he says the web has not and will not change the directory industry overnight. “It is very similar to the debate over digital downloading which the music industry is currently having: will people ever buy all their music online? My guess is that there will be a long period of overlap.”

True as this may be, the issue which directory publishers must also wrestle with is the ability to sell classified advertising space on an online product. Removal of the paper product will almost certainly undermine one of the primary revenue generators of the newly commercialised Phone Book operation, a decision which BT is unlikely to take lightly.

 

BT’s new Phone Book looks set to add some spice to the directory industry, and instigate innovation which may increase interest in what is an often overlooked marketing medium. Tonnon is adamant that this competition will grow the whole market. “The UK directories industry is under-developed: spend on directory advertising as a total percentage of marketing expenditure is lower than in other countries. The market is expanding – just because we have grown, that doesn’t mean our competitors have lost market share.”

In an industry of constant change, such as marketing, directories are one of the few products which have physically changed very little. But despite this, Tonnon says the industry has evolved considerably over the last 25 years. “Ownership has changed dramatically,” says Tonnon. “Directories used to be published by state-owned telecoms companies. But regulations have changed and many are now privately owned and highly successful. Yellow Pages, for example, is FTSE100 listed. There is an understanding that directories are now viable businesses. The industry has grown up.”

Tonnon has changed with the industry, and clearly maintains his enthusiasm for it. The challenge at BT, of effectively growing a new company from the ground up, is particularly appealing. “I get a kick out of seeing the organisation growing and the people growing with it. Building something is fun – perhaps I’ve got a pioneer spirit.”

Whilst becoming an expert in a relatively specialist field may not suit all marketers, it has clearly suited Tonnon, and it continues to suit him. The opportunities it has presented are the rewards.

 

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