CALLING ALL CARDS 1995

JAMES TENSER

For brand marketers, this is the year of the pocket billboard.

Thanks to a flurry of consumer promotions in 1995, millions of American wallets are now sporting prepaid telephone cards imprinted with colorful brand logos or collectible designs. With every free phone call, promoters hope, a brand message is reinforced.

The most elaborate of these promotional giveaways can involve literally millions of free minutes of long-distance time:

An on-pack phone promotion for Yoo Hoo chocolate beverage, now in

stores, has 250 million bottles, cans, drink boxes and chilled cartons flying the promotional flag. Consumers can mail in six proofs of purchase to receive one of four collectible 10-minute phone cards imprinted with images from the Cartoon Network, a cable TV channel.

Hershey has highlighted some 60 million Kit Kat candy bars with news of its Kit Kat Calling Card in-pack promotion. Inside 100,000 of those packages, which are now reaching stores, consumers will find a 10-minute prepaid phone card. Less lucky shoppers may mail in 10 candy wrappers to receive a card.

General Mills and Sprint teamed up on a summer in-pack promotion that put five-minute Spree long-distance cards inside 10 million boxes of Basic 4, Raisin Nut Bran, Oatmeal Crisp Apple Cinnamon, Oatmeal Crisp Almond, Oatmeal Crisp Raisin and Total Raisin Bran cereals. The promotion kick-off coincided with the introduction of Sprint's Spree consumer brand in June.

In a tie-in with the movie "Congo" over the summer, Pepsi-Cola Co. distributed 300 million single-serve soft drink bottles labeled with the promotion. The inner labels on about 17 million of those bottles carried messages informing consumers to call an 800 number and report their PIN numbers to receive a five-minute card or other prizes.

These promotions, which rank among the largest conducted so far, show why telecards may be the hottest new promotion vehicle to enter the brand marketing scene in years.

Pamela Stegeman, Sprint's market manager for Spree prepaid cards, coordinated with General Mills on the summer promotion. "This was the first one where we had two big brand names collaborating for a prepaid card with a large-scale national promotion," she says.

"We thought it was a really great new type of item," adds Kathy Newton, spokeswoman for General Mills, Minneapolis. She notes that Sprint wanted to tap into Big G's powerful grocery distribution to introduce its new consumer brand. The collaboration allowed the cereal company to "offer a brand-new type premium which would have a lot of value," she says.

Adds Stegeman, who brings a consumer packaged goods marketing background to her current job developing the Spree consumer brand: "It has worked out great for us. Both brands have gained recognition and consumer awareness."

While huge in scale, the Spree-General Mills promotion is fairly simple in structure -- no fulfillment process, no custom card designs, just a modification on the packaging lines to apply the peel-off cards to the inner surfaces of cereal boxes. Compare it with Austin, Nichols & Co.'s current promotion for Yoo Hoo, which combines a mail-in premium, a toll-free phone line for redemption information, an entertainment license tie-in and a special incentive for retail buyers.

Raja Kort, director of marketing for the soft drink division of Austin Nichols, New York, says the company learned about prepaid phone cards when it searched for an alternative premium to baseball cards after last year's baseball strike harmed redemptions.

"We still wanted something to attract trial," Kort says. "We like cards. They are nostalgic, with value, collectibility -- both important features of baseball cards. They appeal to a wide spectrum of people."

"We took a long time to decide on the phone card," Kort says. "Our agency offered us several options. Collectible phone cards answered all our concerns."

As to the suitability of cartoon characters instead of baseball stars for the subject matter, he adds: "Yogi Bear and Fred Flintstone never go on strike."

Yoo Hoo teamed with Turner Home Entertainment's Cartoon Network to develop licensed images for the 10-minute phone cards. Four characters -- Yogi Bear, Fred Flintstone, the Jetson's Rosie the Robot, and Space Ghost Coast to Coast -- are each available to consumers in exchange for six proofs of purchase. A bonus fifth card with an image of Scooby Doo is free with any four cards redeemed, to complete the set.

All Yoo Hoo packages are imprinted with a logo for the offer, but since details of the offer were too lengthy to print on cans and bottles, consumers are directed to call 1-800-95-YOOHOO to obtain complete information.

When recipients dial in later to use their cards, they hear a brief recorded message about the Cartoon Network. Global Telecommunications Solutions, an Elmont, N.Y.-based telephone card vendor, provides the prepaid telephone services for the promotion.

Pepsi-Cola Co. also chose an entertainment tie-in for its summer soft drink promotion, linking up with Paramount Studios to hype the launch of the movie "Congo." The promotion, which began June 1, was designed as the cornerstone for Pepsi's core-brand single-serve packages, says April Thornton, director of marketing at Pepsi-Cola Co., who steered the program.

"We had tried a couple of dabbles in phone cards in the past, but those were more directed as trade incentives," she says. "This is our first major consumer-driven promotion using phone cards, and the first to marry the promotional and thematic concepts together."

For the game, which ended in September, Pepsi variable-printed consumer messages inside the specially designed labels of 300 million 1-liter Big Slam and 20-ounce Quick Slam bottles of Pepsi, Diet Pepsi, Mountain Dew and Lipton Brisk iced tea. One bottle in 20 declared the drinker a winner and urged he or she to call an 800 number and enter a code. Prizes, ranging from phone cards to merchandise to an African safari, were preassigned to the codes.

Pepsi slightly underestimated the response, Thornton says. "During peak weeks we were receiving 200,000 phone calls per day."

Her analysis: "Initially the most exciting aspect was the 800 number. Consumers could call in and immediately find out what they had won. The phone cards were immediately activated as part of the fulfillment process."

The total response exceeded projections by about 70%, Thornton says -- a happy result, but maybe also a little bit scary. Planned fulfillment logistics were already awesome. Now there were even more calls, more prizes to award.

"It's a good headache," she says. "We wanted to give them every reason to feel good about Pepsi."

In this case the sheer size of the undertaking may have been a blessing. Pepsi used a separate 800-number fulfillment house, Sound Response, Portland, Ore., which provided voice response technology for the inbound calls. Phone card provider LDDS WorldCom, Jackson, Miss., is issuing and supporting the actual prepaid phone cards.

Although Pepsi and its suppliers are still working hard to put the winning phone cards into the hands of millions of winners, Thornton says she is certain that with hindsight, the company would do a promotion like "Congo" again.

"Yes we would. We are all about creating big news," she says. For companies in the nascent prepaid telephone card industry, the big news is the growth of telecards from the status of quirky collectibles just a couple of years ago into a legitimate consumer product and promotional medium.

"Each card is a walking billboard that you carry in your wallet," says Howard Segermark, executive director of the U.S. Telecard Association, Washington. "You get a positive reinforcement every time the card is used. Five uses of a card may equal 15 impressions."

Says Joe Clark, chairman of the Prepaid Communications Association, another industry group based in Washington, "This year our prediction is that it will grow to be a $1 billion industry in the U.S., in terms of dollar value of prepaid calling. That is not including the supporting advertising expenditures."

That round figure may be optimistic. No reliable monitoring service exists for this industry as yet, and at least one other observer estimates the volume figure at closer to $500 million.

Phone cards are already a multibillion-dollar business in Europe and Asia, where use of pay telephones is more widespread than in the United States. In Europe especially, they have attained a high perceived value that frequently exceeds their calling value, fueled by speculators in the collectors market.

"We have found that a prepaid card is perceived to have a very high value as a gift," says Richard Yalen, vice president and general manager of Cable & Wireless Inc., Vienna, Va., a long-distance carrier and card issuer.

Clark of PCA, who is also executive vice president of Global Telecommunication Solutions, estimates that "roughly 45% of all prepaid calling cards sold this year will be in the promotion arena." About an equal proportion of telecards are so-called "retail cards," sold, like Spree, as retail branded products in their own right, or as store-brand calling cards, an emerging merchandise category.

Adds Brooks Smith, president of InComm, an Atlanta-based service bureau, carrier and card issuer, "Promotional use is growing in parallel with retail card growth. They feed off each other." He notes that collectibility feeds their high perceived value.

Promotional and commercial designs, especially cards created in small quantities as "dealer-loaders," or "talking sell-sheets" by brand marketers, can also command premiums with collectors. Brand marketers are learning to trade on this perceived value.

Kort of Austin Nichols says Yoo Hoo created special versions of its Cartoon Network card series to grab the attention of the retail buyers.

"It was a contest. They called an 800 number to learn if they were winners. They heard a message about the promotion when they dialed in," he said. A total of 30,000 of these cards were sent to the trade. There were 3,000 winners. Prizes ranged from 20 minutes of calling time to cellular phones as a top prize.

The stability and reliability of newly formed service providers is also a matter of concern for brand marketers who are betting their equities on the successful execution of a phone card promotion.

Says Carolyn Culberson, marketing manager at Frontier Communications International, Rochester, N.Y., "We have received urgent calls from people saying that their cards have been cut off, can we reactivate them?"

In the event of any sort of service failure, adds Kort of Austin Nichols, "Consumers won't blame the phone card company, they will blame us." He recommends a careful evaluation of phone card service providers, from the standpoints of business references and financial stability.