Vonage Starts Rallying Cry For Broadband Phones

With large communications companies mostly on the sidelines and smaller players focusing on highly targeted direct and online efforts, Vonage is hoping to take an early lead in the broadband-telephone field with a $15 million national campaign.

TV and radio work from New York shop The Gardner-Nelson Project portrays Vonage as the rallying point for a grassroots movement against traditional phone companies. Vonage provides phone service through the Internet for a flat monthly fee, a system known as Voice Over Internet Protocol or VoIP.

In one TV spot—fashioned in 30-second, 60-second and 1:20 versions—shop owners post signs in their windows that read, “Down with high phone bills, switch to Vonage.” People are shown supporting the company with signs, and kids hold signs in their yards. The ad ends with onscreen text: “Vonage. The broadband phone company.”

“[The work’s] primary objective is customer acquisition, but it does provide a branding vehicle as well,” said Dean Harris, chief marketing officer at the Edison, N.J., company.

Radio spots are similar to the TV, with actors advocating Vonage. The campaign also includes online ads from Carat Interactive in New York.

The TV spot, which broke on 20 cable stations late last month, is backed by about $15 million through year’s end, Harris said. The company’s 2004 ad budget is about $20 million, he said.

Previous, in-house ads featured testimonials from Vonage customers.

Vonage, launched in 2001 by chairman and CEO Jeffrey Citron, started offering VoIP service in April 2002—the same month Datek Online Holdings, founded by Citron, was purchased by Ameritrade for $1.3 billion. Vonage, which “appears to be leading the edge-based providers with over 50,000 subscriptions,” according to a recent report from UBS Investment Research, expects to sign up an additional 50,000 subscribers by year’s end.

“Vonage has jumped from being an obscure little company no one has ever heard of to one that people are writing about and talking about,” said independent telecom analyst Jeff Kagan. “They’re creating a buzz.”

Big players have yet to make a major marketing push in VoIP, while smaller ones have concentrated on online and direct efforts, Kagan said.

Telecom iConnectHere, the consumer division of Delta 3 in New York, buys online ads and search-engine keywords, tracking click-through rates and cost per acquisition, said Jeremy Teres, company director of consumer marketing. Another VoIP provider, Atlanta-based cbeyond, does not yet have a comprehensive marketing plan and has handled efforts in-house since its 1999 launch, a cbeyond rep said.

Cbeyond claims 8,000 subscribers, and iConnectHere about 10,000.

Time Warner Cable began a trial broadband-phone service in the Portland, Maine, area in May and has about 5,000 subscribers, a TWC rep said. Cablevision last month launched VoIP service in Long Island, N.Y., and plans to extend it in the tristate area by year’s end, said a company rep.