Vonage: the tale of an underdog

In the beginning, the folks who endeavoured to bring broadband phone company Vonage to Canada would meet in the basements of each other's homes or at a local Tim Hortons. It was 2004 and the four-year-old New Jersey-based brand, which allows subscribers with an existing high-speed Internet connection to make and receive calls around the world from a touch-tone telephone, was gearing up to enter Canada. (Last January the U.K. became the third market.) The U.S. had launched a Canadian Web site in April, but there were no employees, office space or branding. Today, the coffee shop meetings are a thing of the past. The Mississauga, Ont.-based company has a national presence, over 80 employees, and has even coined a term that represents the burgeoning new technology in the progressively rough-and-tumble world of telecommunications, where everyone from Skype to Bell is the competition. How? Here's a play-by-play on how this little brand is getting really big.

In the beginning, the folks who endeavoured to bring broadband phone company Vonage to Canada would meet in the basements of each other’s homes or at a local Tim Hortons. It was 2004 and the four-year-old New Jersey-based brand, which allows subscribers with an existing high-speed Internet connection to make and receive calls around the world from a touch-tone telephone, was gearing up to enter Canada. (Last January the U.K. became the third market.) The U.S. had launched a Canadian Web site in April, but there were no employees, office space or branding. Today, the coffee shop meetings are a thing of the past. The Mississauga, Ont.-based company has a national presence, over 80 employees, and has even coined a term that represents the burgeoning new technology in the progressively rough-and-tumble world of telecommunications, where everyone from Skype to Bell is the competition. How? Here’s a play-by-play on how this little brand is getting really big.

July 2004

* Bill Rainey, president is hired. Previously, he was SVP, commercial services at GT Group Telecom, a Toronto based telco that supplies wireless services to business and government. He had also had a long stint at Telus. He starts the search for a senior management team.

August 2004

* Joe Parent, who is in the Czech Republic working at a cellular provider and has held senior marketing roles at Unitel, Sprint Canada and Primus, applies and gets the VP marketing and business development post. The fact that Vonage technology allows consumers to continue to use their home phone is particularly appealing to him. ‘It was positioned to be just a great product because of the disruptive nature of the technology, with the ability to change all the rules.’

September 2004

* Rainey’s initial hiring spree is complete, signing six key people.

* Initial steps include scouting for office space that would accommodate a call centre, as well as thinking about the branding strategy. Key questions include: What are the key messages? What applies to Canada, what doesn’t? What’s the branding going to be?

October 2004

* Toronto-based ad agency Brandworks becomes AOR. PR agency Silverhammer, also in Toronto, is also signed on. PR would later become the key launch strategy to help position the brand.

The PR objective is to establish credibility of the brand and its new technology with key business media. The Vonage management team is positioned as industry spokespeople. ‘PR was way ahead of the marketing campaigns to make sure that the media and analysts knew who we were [and that the brand was] positioned as the ‘drivers of the market,” says Parent. ‘We needed to establish credibility and presence in the market early on.’ Silverhammer’s account counsellor Karen Gumbs says PR helped Vonage reach 100 million readers in such publications such as the Financial Post, the Globe and Mail as well as smaller community publications like the Mississauga News. Lorne Kirshenbaum, principal and director strategic planning at Brandworks, says reaching early adopters, in this case, ‘guys who live on the computer’ [25 to 40] are the first key target. The online media buy is extensive.

* Reaching a broader market, however, might prove difficult. In Canada, it’s key to ‘not only convince people there was a different way to use the telephone but to actually walk away from relationships,’ says Kirshenbaum. The agency finds, from general trends and current adoption rates, that Canadians have a reticence when it comes to leaving brands like Bell. ‘We need to disrupt the relationship,’ he says.

* The brand has to position itself as identifiable and very distinct from current and any future competition. They decide not to use the U.S. marketing. ‘We made a gutsy decision to take a departure from the U.S. branding and positioning,’ says Parent. ‘At that point in time they were heavily invested in their ‘People do stupid things’ campaign, which was very successful, [but we] felt it wouldn’t be appropriate for our launch in Canada.’ Why? ‘They were four years ahead of us, with a much higher level of market awareness and brand identity. We needed strong branding elements to differentiate and position ourselves to be shark-proof, so to speak, for when the incumbent telcos and cablecos came in.’

*The strategy then is to highlight that the product is similar, the price better, billing is transparent and the experience more consumer-centric than the competition. Quality customer service is also looked upon as a central strategy since the brand is up against the big boys.

*Brandworks also comes up with the tagline ‘I VoIP with Vonage.’ The term VoIP, which stands for voice-over-Internet protocol, works well because of the wordplay between VoIP and Vonage. ‘The industry is invariably referred to as VoIP [but] at the time it was a toss-up between Internet, broadband telephony, voice over IP,’ says Parent.

*The print ads include a mix of branding devices such as a strong corporate colour (orange), an orange phone as an icon, and models flashing a ‘V’ to reinforce the name. The retail strategy is to partner with chains like Staples, Best Buy and The Source, rather than set up retail shops.

Final details of the rollout, including which regions to start in, are hammered out. Kitchener-Waterloo, Ont. is selected as the first launch region.

December 2004

* The three-week test/launch in K-W is in full swing. They test radio, outdoor, daily and online. ‘[We] took the learning out of that and applied it to Toronto and the Southwestern Ontario market.’ Key insights: A fully integrated campaign is needed. ‘Any element of the campaign by itself would be fine. But to take those, overlay and add PR makes it much more efficient. [We] still do it today when launching in a new geographic area, says Parent.

January/February 2005

* The mix of radio, PR, and retail demo days is applied to a more visible and aggressive launch in the GTA. Everything is measured against what meets Vonage’s subscriber acquisition targets and what doesn’t.

February to June 2005

* There is regional rollout across the country except for Saskatchewan, parts of Quebec and the east coast (current target regions). ‘Every week is a record week for acquisitions,’ says Parent. ‘We’re in hypergrowth mode. All the key measures like click-throughs, conversion rates, impressions are now tracking very close to the U.S. numbers and they’ve been at it for four years.’

July 2005

* A national TV campaign on Alliance Atlantis’ speciality channels ensues. The ads are quirky with a comic book-esque feel. Brandworks media buyers find a deal, based on CPA, cost-per-acquisition for a 13-week stretch.

* It works swimmingly. ‘We saw all key indicators going in the right direction. It moved things forward and, as it turns out, it moved things forward permanently. When the campaign finished 13 weeks later, we didn’t see a reduction of traffic. As a result, we suspect that TV will always be a part of our marketing mix moving forward,’ says Parent.

Today

* The launch has been very successful. ‘When it broke [in the U.S.] you saw the growth curve shaped like a hockey stick and shoot right up. We’re seeing that happen in less than a year.’ Vonage has also secured a very broad retail footprint, with presence in over 1,200 consumer electronics/business retailers. ‘We expect to see that expand, not only deeper into our retail market segments, but also into new segments [such as] big box,’ he says.