John Linton
One of the reasons I was more interested than usual in looking at advertising over this weekend was the fact that the management of the building out of which Exetel operates is thinking about offering signage to one of its tenants. The building we are in is quite prominently sited and because it's on the 'wrong' side of the freeway at North Sydney it dominates its part of the sky line and is highly visible by both northbound and southbound traffic crossing the harbour bridge. Bayer has the rights to the roof signage and has big neon signs on three sides but now the building owners are offering signage on the front facia of the building which is still very prominent.
When People Telecom put a pink neon sign on one of the buildings in the 'right' side of North Sydney I thought it was a total waste of money because the visibilty of the sign was highly restricted and the whole concept seemed to follow the, then, silly series of 'marketing initiatives' being carried out by that company at that time. I don't know how much value a sign would deliver to a small company like Exetel other than as some sort of ego thing. However it might provide something in 'image' terms as Exetel continues to move towards deriving more of its revenue from services to business customers who are predominantly in the Sydney CBD and North Sydney areas where a sign on the building would be highly visible.
Exetel has never spent any money on 'marketing' and I didn't like creating a new expense line in the business plan with that heading and liked putting in the possible set up and monthly costs over a three year period even less (I can't get out of the habit of thinking how much additional bandwidth can be bought for that sort of money).
An interesting situation is that no financial quantification can be used in making this decision (at least as far as I can see at this time). The costs can be clearly established and the contract fixes the costs for at least three years as an ongoing and maintenance expense but no sort of return can be estimated - it seems to be pure ego.
A decision will have to be made next week, at least in principle, as I doubt that the building owners will want to procrastinate and I forgot to raise it at last night's board meeting but will discuss it with Steve and Annette over the next couple of days when some more precise numbers are known. My current feelings are that it isn't something that Exetel should do at this very early stage of its corporate 'life'.