By Geoff Colvin, senior editor-at-large
FORTUNE – Bigtime marketing doesn't get much bigger than this: AT&T (T) spends more money -- some $2 billion last year, says Kantar Media -- building a single brand than any other company in America. (Procter & Gamble (PG) wields a larger ad budget but divides it among scores of brands.) Commanding the branding is Cathy Coughlin, 55, AT&T's global marketing officer. She spoke recently with Fortune's Geoff Colvin about creating network TV commercials for the Olympics in 24 hours, the rise of nomophobia (fear of not having your cellphone), why your umbrella's handle may one day glow, and much else. Edited excerpts:
Q: AT&T had a large marketing presence in the Olympics. That may seem a very traditional kind of marketing. Was it?
A: Not at all. For example, this year we did something different. We used gold-medal-winning performances by some of our sponsored athletes in the commercials the day after the winning performance. In the case of Rebecca Soni, her gold-medal swimming performance was followed by a commercial with a young swimmer watching that performance on her smartphone. It's been really fun. We've gotten a lot of "How did they do that?" reaction. We're a "Rethink possible" company, and we want that to come to life in our marketing.
You do a lot of consumer research. What have you learned about how your customers live and how that's changing?
We've seen an amazing shift in the role that technology plays in people's lives and how they view technology. Three or four years ago we were testing a new advertising line prior to "Rethink possible," and it was around this notion of doing more. People's reaction was, "I don't want to do more. Get away from me. I feel like I'm a slave to my computer. I feel like it's separating me from my family. It's taking away from my life."
We did that same sort of research last year and saw it completely flip-flop. People tell us, "My device is part of who I am. It enriches my life. It helps me live on the go. It helps me take care of my family, watch over them, be the hero in the moment."
From a marketing perspective, we've gone in a very short time from people being fearful of technology to being fearful of being without it. I just read yesterday that there's a new term for the fear of not being with your phone -- nomophobia. It's derived from no-mobile-phone phobia.
You have over 100 million customers, and by the nature of the business, you can know a great deal about them. How has that enabled you to know them better and inform your marketing?
Some interesting trends are emerging. Just a few years ago you and I would use our smartphones before work, on the way to work, and on the way home. Now we're using them all day. Even though in your office you have a phone on the desk, you don't use it. You're using your mobile technology all day. So we're spending millions of dollars enhancing the service inside the building with new antenna technology, especially in places like New York, Chicago, San Francisco, where there are so many high-rise buildings. This has lots of implications from a marketing perspective. An example is working with CIOs, because they no longer dictate the device you're going to use. People don't want multiple devices. So you see an interesting shift from a marketing perspective, where the employee has a bigger voice in the technology that's being used in companies.
The way people consume media is also changing fast. How has what you learned affected your marketing?
Because technology has gone from something you fear to something you fear being without, our marketing is showing the use of technology in everyday life. That's showing up in places on the web and on YouTube in addition to traditional commercials. We partnered with Tim Kring, the creator of Heroes [a series on NBC from 2006 to 2010] and of Touch [a series launched this year on Fox], and with our advertising agency, BBDO, to create a really great five webisodes called Daybreak. Instead of the traditional entertainment marketing approach, where I put my product on the table and pay for that placement, the technology is integrated into the story line. Ben, the hero in our story, is fighting the forces of evil, and he is using our technology to get around the bad guys.
Another example is a series on YouTube called Away We Happened. It was born out of the insight that the target audience, Asian Americans, are above-average users of social media. So we created six webisodes. The really interesting learning here is that we created only the first webisode. These two young professionals meet by happenstance in a coffee shop on the way to the airport, and somehow they take each other's luggage. At the end of the webisode the question is asked, "What do you think should happen next? Should they meet up?" Using Facebook, our viewers input ideas and voted on them. The script for the next week was written, shot, produced, and put up on YouTube that week. We've had millions of viewers. Our smartphone devices again played an integral part in the story. It's been a really fun adventure for us.
These are experiments. Do you try to measure their success?
How do you do it?
A number of ways. We've had millions of views of the Daybreak series, but we also developed an app called the Jackboxer App -- the Jackboxers are the good guys in Daybreak. You download the app to your smartphone and follow clues along the way throughout the webisodes. You could learn more about the technology that was used in a webisode, so we take you to our website. We're lucky because our customers are so passionate about their technology that they always want to learn more. We find that many users go to the website and are spending about an hour on average looking at the technology, checking out the device that was used, the HTC One, checking out the Translator or the Watson technology or whatever.
The competition among wireless carriers to introduce new services is relentless. How do you keep up?
We have what we think is one of the largest crowd-sourcing ideation programs. We have 250,000 employees. All of them can submit an idea, and it's crowd-sourced, so people say, "But what about this?" or "What about that?" We bring some of those ideas into commercial use. For example, a young father was using two devices at work, one for work and one for home, trying to keep up with his job and his family. He came up with the idea of having a single device with multiple personas. He submitted that idea. We worked it through our Foundry outside Dallas, one of our three innovation centers around the world. And it became a commercial product we launched last fall called AT&T Toggle.
You're responsible for building this brand, but ultimately isn't the brand embodied in the behavior of the company and its employees every day?
We always say that the AT&T brand comes to life when someone walks into one of our 2,300 retail stores, when a technician goes into their home, when they use our products and services. The advertising, that's icing on the cake. The cake is the experience.
Just about everybody in America who wants a cellphone has one. Where do you find significant growth?
What we've experienced over the past five years is just the tip of the iceberg. We've seen a 20,000% increase in the usage of our network over the past five years. We expect that over the next five years we'll grow another 75% every year if the spectrum is available. So you ain't seen nothing yet.
The digital home is a great example. You'll be able to run your household from your office, from your vacation spot, and to do things like not only know that there's a water issue in your home but also, using your tablet, to shut your water off. If your son or daughter comes home and the door is locked, you can activate your camera, unlock the door, and see them go in. You can watch them do their homework.
One day you'll walk out of your home and you won't have to check to see if it's going to rain because the handle on your umbrella will glow, which tells you, "You'd better take me because it's going to rain today." Everything will be better when it's wirelessly connected.
You've spent your career with AT&T. Is that the career path you'd recommend to a young person today who wants a career in marketing?
Yes. The company has changed and grown, and our chairman [Randall Stephenson] says that if you miss one technology cycle, you're out. The pace of change has been amazing, and what we sold to customers when I first started is very different from what we're selling today. That focus on the customers and where they're headed is what keeps everything exciting. There are probably two things that you'll turn your car around for and say, "Oh, my gosh, I've got to go home and get that." They're your smartphone and your wallet, and we're working to eliminate the wallet with mobile payments. From a marketing perspective, it doesn't get any better than that.
The Leadership series This is the latest interview with a top executive by Fortune senior editor-at-large Geoff Colvin. See video excerpts of this interview at fortune.com/leadership -- plus find Colvin interviews with GM's Dan Akerson, Dow CEO Andrew Liveris, Chicago Mayor Rahm Emanuel, Southern Co.'s Thomas Fanning, and many more.
This story is from the September 3, 2012 issue of Fortune.
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