Comments on: Vonage Scary Big Spending Ways

By: ZZidane

ZZidane — Mon, 14 Aug 2006 16:20:16 +0000

It is surprising that it skews that old.. but there are some amazing videos being uploaded by the 1% that can make the experience kind of addictive once you get there.

By: Anonymous

Anonymous — Wed, 17 May 2006 20:20:34 +0000

Voip Weekly had a great article showing all the stats on Vonage. Their CPA is around $210 and around $250 with CPE (customer premise equipment), coupons, and such. Their 2.11% churn rate is amazing. I believe that figure only includes those customers that have been with them more than 30 days.

By: Om Malik on Broadband : » Vonage Churn Investor Heartburn

Om Malik on Broadband : » Vonage Churn Investor Heartburn — Fri, 10 Feb 2006 07:15:27 +0000

[...] “During the nine months ended September 30, 2005, we experienced average monthly customer churn of 2.11%. Our churn rate among those U.S. direct and retail customers with us for more than six months was lower,” the company says, in its filing. That seems to be a rather innocuous number. To be fair, the company’s churn rate of 2.11% is pretty darn good - if you compare it to other Internet related services business such as web hosting and DSL High Speed Internet that see about 1%-to-3%. Vonage is actually doing much better than it had reported earlier. [Talk about being wrong in my estimates previously. The numbers reported in the S-1 were exactly half of what I had estimated with the help of others. My original estimate was 4% churn and $400-per-customer acquisition cost.] [...]

By: Gerritson Joke

Gerritson Joke — Tue, 23 Aug 2005 23:29:35 +0000

Fluoxetine

Vonage Scary Big Spend…

By: Om Malik’s Broadband Blog » Skype, Not Vonage Synonymous with VoIP in Blogsphere

Mon, 04 Jul 2005 18:50:32 +0000

[...] ogic of Vonage spending a ton of money on advertising and whether is it having any impact. Well it is something I have often wondered about, especially now that cable companie [...]

By: Aswath Weblog

Aswath Weblog — Wed, 01 Jun 2005 20:23:03 +0000

Skype Parasites

Andy comments about Zooms Pay as you go service. (By the way they seem to offer an In service as well.) Recently Russell Shaw compared Vonage and Skype and suggests that for certain usage models Pay as you go scheme…

By: Rob Leathern

Rob Leathern — Wed, 01 Jun 2005 15:09:06 +0000

Important to note that the online spending figures are certainly overstated. Looking at data from NetRatings AdRelevance backs up that Vonage is the biggest spender online, but spending figures from TNS or AdRelevance are typically overstated due to their use of ratecard pricing. AdR in particular has done a lot to ‘normalize’ spending levels to better numbers using publicly released figures from the likes of Yahoo! and other publishers, but a bias still remains especially for the large players who are negotiating 8-figure deals with Yahoo! and others.

Their customer acquisition costs are extraordinarily high, however, if you roll in TV I would say it is probably in the $300+ range but not as high as $400. Time will tell, when these guys have to eventually disclose the actuals. It’s a great service (and Skype won’t cut it for a lot of the mainstream for quite some time) but I worry when I see as much advertising as I do ~ it’s like either it’s a mortgage ad or a Vonage ad wherever you go online.

By: Eric

Eric — Tue, 31 May 2005 15:16:59 +0000

Om – “If you look at the number of customers they are adding – 15,000 a week or 60,000 a month, that makes it about $363 per customer in acquisition costs.”

Actually, those were their customer adds before they upped their spending. Previously they were at $7-$11 million in spending per month.

Spending $10 million per month and adding 60,000 would be a $166 CPA. Spending $7mil/month/60k would be a $116 CPA. Add in other misc costs and you get to your $150-$200 CPA that Citron quotes.

By: Asylum MI news test » Vonage: Raise a Lot, Spend a LotMark Evans

Asylum MI news test » Vonage: Raise a Lot, Spend a LotMark Evans — Tue, 31 May 2005 07:34:13 +0000

[...]

According to ClickZ, Vonage spent $21.8 million in April on advertising. As Om Malik succinctly puts it: now you can see why they needed to raise $200-million i [...]

By: Om Malik

Om Malik — Tue, 31 May 2005 05:03:43 +0000

Nitin

I agree … this is a story which has unfolded many times before – in case of DSL it was even more stark.

Aswath,

I for one, agree with you on the whole issue of skype’s infrastructure costs.

By: craig

craig — Tue, 31 May 2005 05:02:59 +0000

Its about the service dammit! ;-)

By: Nitin Ahuja

Nitin Ahuja — Tue, 31 May 2005 02:20:25 +0000

The telcos will finally catch up, for a long time they have considered VoIP as what they call a “disruptive technology”, but they are slowly embracing it, since its pretty much inevitable, and they would have long term traction in terms of market position,because they have systems in place (customer service,marketing etc) that new companies like Vonage cannot beat.

By: Aswath Rao

Aswath Rao — Mon, 30 May 2005 16:58:31 +0000

It might be true that Vonage has high infrastructure cost, but I would like to suggest that one can deploy a service that has the almost the same infrastructure cost as Skype (I reject the claim that Skype’s cost is zero). The only difference is which revenue model is preferable: fixed monthly subscription vs. usage charge. The former incurs acquisition cost and the latter has to compete constatnly for customers, because they can bolt at any time. Neither is appealing in an environment where the demand will only diminish as time goes by (due to wider broadband adoption and migrtation away from PSTN.

By: Phones

Phones — Mon, 30 May 2005 06:29:13 +0000

Vonage Scary Big Spending Ways

If you’ve got it, flaunt it. Vonage is plowing through it’s $200M financing to buy market share:…

By: Carl

Carl — Mon, 30 May 2005 05:09:32 +0000

peer-2-peer

Nobody really talks about Vonage’s cost of servicing customers vs Skype. The other side of the coin is that Vonage is collectly monthly revenue from those customers.

It seems the monthly subscription view justifies the infrastructure cost and the p2p aspect of Skype doesn’t play up that much in the comparison.

Except for the viral effect and the potential customer base.

That’s all.

By: Carl

Carl — Mon, 30 May 2005 05:05:21 +0000

When you’re afraid to admit you have a high customer acquisition cost, you call the difference branding…