The “Beauty” of Combative Advertising: Verizon Vs. AT&T

If you are an avid television watcher, you cannot avoid being a spectator in the advertising battle between Verizon Wireless and AT&T, the #1 and #2 wireless carriers respectively (Hoovers). Since the middle of 2009, the two wireless providers have declared war on each other through the use of coverage maps and their respective 3G networks. Both companies are vying for market share in an already competitive industry and have really gone head-to-head over the past year.

The problem first arose with an ad attacking AT&T by Verizon promoting the fact that Verizon’s wireless 3G service coverage happened to be 5 times more than that of AT&T. Verizon depicted this fact in visual form by utilizing two maps: one representing its own coverage (in red), the other representing AT&T’s 3g coverage (in blue). Mid-November of last year, AT&T sued Verizon over the ad campaign, arguing that Verizon’s ads were creating the perception that AT&T had no coverage at all in these areas, resulting in a significant loss of customers (PC World, 2009). The courts disagreed with AT&T, and allowed Verizon to continue running their ads on television.

AT&T responded to these ads by emphasizing the fact that only AT&T’s 3G network allows you to talk and surf the web at the same time. The combative advertising technique present in this case dictates that “an increase of advertising in one firm may reduce the sales of rival firms, and rivals may then react with a reciprocal increase in their own advertising efforts.” Combative advertising does not increase the size of the wireless industry, instead it leads to customers shifting from one wireless provider to another. This causes a prisoner’s dilemma because both companies would be more profitable if they did not advertise, however due to dominated strategies both companies choose to advertise. Both companies in this situation incur more costs than benefits. It is yet to be seen if and when this combative advertising will cease between these two giants in the telecommunication industry.

This blog post is written by Freddie Joyner, Ben Lee and Tracy Liang