Massucci's Take: Apple teams with AT&T in ad battle with Verizon

Apple (AAPL) broke its silence in the advertising battle going on between AT&T (T) and Verizon (VZ). The iPhone maker launched its ad campaign this week showing an iPhone user talking on the phone while surfing the Web as a voice asks, "Can your phone and your network do that?"

It's Apple's comeback to Verizon's latest attack on the iPhone which runs on AT&T's wireless networks.
Verizon started this ad war by picking on AT&T. AT&T then sued Verizon earlier this month, saying Verizon was misleading viewers by suggesting customers not connected to AT&T's 3G network will not be able to use their mobile phones at all. A judge ruled in Verizon's favor and the ads continue to run. Verizon then took aim at Apple's iPhone in its TV ads, which sucked Apple into this war. My view: Verizon can beat AT&T, but won't win this fight with Apple.

"Everyone is chasing Apple at this point," says Ryan Jacob, who manages the Jacob Internet Fund, which owns Apple shares. "Apple does spend a lot on advertising and probably felt it was appropriate to respond."

Apple's ads, which began airing this week, are considerably more subtle than AT&T's, which accuse Verizon of false advertising, wrote Fortune's Philip Elmer-DeWitt. Jared Newman of PC World wrote that Apple's new iPhone ads, aimed at Verizon, are "actually good," and the computer-maker takes the high-road in the battle. "Instead of flinging mud at Verizon, they demonstrate how the iPhone takes advantage of AT&T's ability to place calls and use data at the same time," he wrote. It's the show, don't tell, tactic. Rather than calling Verizon names, they simply show what their product can do.

AT&T continues to point left, hoping that folks won't look right. I saw an AT&T ad Monday night on TV featuring actor Luke Wilson walking on a large map colored with areas with AT&T's wireless coverage in the U.S. He's throwing postcards around aimed at different U.S. cities in an effort to show all the places where AT&T has wireless coverage. I believe viewers understand they can make and receive AT&T wireless calls almost everywhere. No matter how often AT&T tries to distract us in their new ads, iPhone owners are fully aware of the limits of their 3G network.

Whether it's Verizon's Droid phone or Palm's (PALM) Pre phone, sold by Sprint (S), Jacob, who manages $40 million, says, "They don't reach the variety of what you get on an iPhone." When the real iPhone killer phone goes on sale, there will be overwhelming buzz on tech blogs and by worried Apple fans. The phone company selling that handset won't need to throw mud or spend many ad dollars to spread the word.

I have applauded AT&T telling us how it is improving its 3G network. The company should continue to beat that drum. Verizon, on the other hand, is clever to play to its strength of its more reliable 3G network, but not smart to think it can outfox Apple's unlimited marketing budget.

Anthony Massucci is a senior writer for DailyFinance. You may follow him on Twitter at hianthony.
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