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Phone Customers Placed on Hold May Get an Earful of Advertising

Instead of Muzak, firms play telemarketing messages over the line

BEEN stuck ``on hold'' lately? If so, you may have noticed that these days, those frustrating seconds - or minutes - are often filled with more than dead air or Muzak.

Many businesses, recognizing an untapped marketing opportunity and anxious to prevent customers from hanging up, have begun playing recordings that include promotions of their latest sales and products, general news about the company, or hard-hitting advertisements. These recordings are known as ``messages on hold.''

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``[When] all calls are coming in on 800 numbers, it is expensive to keep people on hold, and beyond that, [it is] annoying to people,'' says Keith Dawson, editor of Call Center Magazine, a New York publication devoted to telecommunications technologies. ``You want to shorten the time, but also use it as an opportunity to sell and give information.''

When the Automobile Club of Utah, an affiliate of the American Automobile Association (AAA), included messages about its international driver permits, sales increased more than 300 percent, AAA says.

Classic Manufacturing Inc., a Sturgis, Mich.-based manufacturer of race cars and cargo trailers, took a humorous tack last fall. One of its messages-on-hold begins with an ominous drum roll. Then a deep voice says, ``Just when you thought he couldn't make another sequel, Arnold Wartzenager is back in ... `The Trailer-nator, Part II.' '''

Alan Kvares, president and founder of Miami-based Telephonetics International Inc. (TII) - which produced the AAA and Classic Manufacturing ads - came up with the idea of messages-on-hold marketing in 1979. While having his car repaired, he watched the mechanic put customer after customer on hold. Mr. Kvares says he realized the marketing opportunity this mechanic was missing. Soon after, he sold him a message tape.

TII, today the country's largest messages-on-hold company, grosses about $4 million annually, Kvares says. Sales have grown 100 percent each of the past two years, he adds. The company's 50,000 clients include Ford Motor Company, Pepsico Inc., and AT&T.

TII and other well-established messages-on-hold companies provide their customers with customized tapes and licensed music. Most messages-on-hold companies, however, are ``fly by night'' operations, says Richard Snider, who started Marketing Messages in Newton, Mass., in 1984.

``It is a crazy industry,'' Mr. Snider says. ``Many laid-off disc jockeys have gone into it. They have an [audio] mixing board in their garage and decide to do messages-on-hold.'' Snider, who tracks the industry, estimates that 92 percent of businesses operate for less than three years, and 70 percent fold within a year.

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TII's newest messages-on-hold product - Algorhythm Remote Digital Narrowcaster - uses computers to download messages over phone lines to customers with TII message machines.

A bank with multiple branches, for example, could update the interest rates advertised on its message at every branch in just a few hours. AT&T and a Southern banking chain with 250 locations are among the companies that have already agreed to purchase Narrowcasters.

``When you take the concept of [messages on hold] and the concept [TII] has put together, and you tie that with the basic principles of marketing, it becomes a formidable weapon for companies using it,'' says Ross Scovotti, publisher of TeleProfessional Magazine in Waterloo, Iowa.

But Kvares has his sights set even higher. He says he hopes the Narrowcaster will help his customers sell their on-hold time to outside advertisers. Blockbuster Video, for example, could sell Warner Brothers time to advertise its latest video release to Blockbuster customers waiting on hold. TII has yet to seal any advertising deals, however.

But playing outside advertisments to customers on hold can be a dangerous practice, some TII competitors say. ``It's a coming trend, but we advise against it,'' Snider says. ``People get steamed. They don't want to wait and they don't want to be advertised at.''

Marcus Graham, president and founder of GM Productions Inc. in Atlanta, compares the evolving voice messaging industry to early radio.

``Radio didn't take off until Orson Welles and people from the world of theater started doing dramatic readings and made it interesting,'' Mr. Graham says. ``Voice messaging and voice mail is the same way today. It is getting past the `gee whiz' stage.''

GM Productions produces one- to four-minute company newsletter broadcasts for businesses such as Georgia Pacific. The newsletters are sent to employees' voice-mail boxes, or employees can dial into a central number.

Graham says advances in phone technology may mean a short lifespan for on-hold time. Voice mail, for example, which allows people to circumvent staying on hold, will cut into the industry's growth, he says. ``[Messages on hold] could be obsolete in a decade or so,'' he says.

Just when they were getting fun.

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