BT boosts advertising to fend off competition

British Telecom is to boost its advertising spending from the new year by up to two-thirds in the phone giant's biggest ever marketing campaign. The growth comes as BT faces its most serious competitive threat yet from the rapidly consolidating cable industry.

Though BT has always declined to release specific figures for its advertising budget, it is thought that next year's campaigns could raise spending to as much as pounds 200m. It comes on top of a dramatically increased marketing effort so far this year which Sir Peter Bonfield, chief executive, recently stated had already doubled the 1996 advertising budget to a figure believed to be about pounds 120m.

Most of the cash will go on the company's most ambitious television advertising campaign to date, with as many as 80 separate commercials planned to start from the new year. It has emerged that some of the adverts feature former stars of the BBC soap opera EastEnders. The campaign will also bring a further boost in revenues for BT's main outside advertising agency, Abbott Mead Vickers.

Many of the adverts will hit the screens as BT's rival, Cable & Wireless, completes the merger of its British subsidiary, Mercury, with the UK operations of three cable companies, Nynex CableComms, Bell Cablemedia and Videotron.

The pounds 5bn deal has been given the blessing of Don Cruickshank, the telecommunications regulator, partly because it is also likely to see much closer attention paid on advertising and marketing. Cable operators have been widely accused of lacklustre advertising, including the disastrous pounds 12m campaign earlier this year, devised by the J Walter Thompson agency and featuring comedienne Dawn French, which attempted to market separate companies together as a single alternative to BT for telephone services.

There are signs that BT's "Good to talk" strategy has begun to pay dividends. The aim is to offset an anticipated decline in BT's market share with substantial increases in telephone usage by customers. Over the past 18 months BT residential customers have spent an average extra 77 seconds a day on the phone, taking total daily usage to over nine minutes.