VoIP Marketing Battles Revving Up


Vonage’s big spending ways has made it somewhat of a “super hero” in the ailing advertising business. The company’s recent account was up for bid, and I have heard that a lot of people were jostling to get a piece of the action. Easy to understand, for Vonage is everywhere. Yahoo in particular is getting a lot of dollars from Vonage, if the # of banners is any indication. Vonage, which was named private company of the year by New Jersey Technology Council, is going to be spending a lot of dough in 2005, about $75 million on marketing alone, CEO Jeffrey Citron tells Wall Street Journal.

For this year 2004, we spent about $40 million. We plan to spend about $75 million next year. Half of the budget will be used for online marketing and the other half on other mass communication such as TV ads, radio and sports programs. Those will help brand building and generate mass awareness.

I just love Jeffrey. He is all happy and smiling, but give him an in and he will throw the smack down.

Easily. AT&T’s brand stands for something and right now AT&T doesn’t know what that is and clearly AT&T customers are confused about what AT&T is offering them. The AT&T brand is changing to be a business-oriented brand. Vonage is focusing on the residential market and small business. That is where we will continue our efforts.

Sure it would be nice to see Vonage do some serious damage in the market, for I like to root for the little guy. However, odds are stacked against them, as Yankee Group said yesterday. And of course, you could see my two cents on their financial state and where they are going.


Andy Abramson

One more comment. Vonage claims they have 300,000 or so subs. I’m not sure if they had 50,000 or 100,000 or 150,000 when they started the year before they spent $40 million.

For every subscriber over 50,000 that they started with, the cost goes up incrementally. That said, it is clear Vonage is spending a lot of money to get bigger.

Andy Abramson

If Vonage grew by what I think was 250,000 or so users on the highest level, and they spent $40 million, that means they spent no less than $160 per sub in advertising to get a customer, before ATA costs, shipping of the ATA, and of course the cost of the line charge itself.

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