Vonage Calls on Behavioral-Based Ads
DMNews.com, May 17, 2004

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Vonage, a telecommunications company that delivers telephone calls over the Internet, this week breaks the first three subsets of an online advertising campaign to gain subscribers for its flat-fee service.
The campaign uses Oddcast-technology animated conversational characters in Claria sliders and pop-unders -- behavioral-based ads served while the user surfs -- in addition to a presence on Yahoo.

"This is about finding ways to speak more specifically to those audiences out there that could become Vonage customers," said Judy Gern, vice president and group account director at Vonage agency Carat Interactive, Boston.

Vonage, Edison, NJ, styles itself as a broadband phone company with a simple fee structure. For residences, it is $29.99 a month for premium unlimited service, $24.99 for unlimited local plus 500 minutes and $14.99 for basic 500 minutes. It costs $49.99 a month for the small-business unlimited plan and $39.99 for business basic 1,500 minutes.

Those plans include free features like voicemail, caller ID with name, call waiting, call forwarding, call transfer, three-way calling, calling to Vonage users and area code of choice or retaining the current number.

So far, 145,000 Vonage lines are in use, with more than 20,000 added monthly. More than 5 million calls weekly are made using Vonage.

But as expected, Vonage has a tough time persuading phone users to switch services. Often, consumers are enrolled in convoluted calling plans to make switching costs between phone companies higher. Getting their attention is crucial, and the Internet is Vonage's medium of choice to send those marketing messages.

With the latest effort, Vonage matches the Oddcast characters with three likely behavior segments.

The first segment is phone service seekers -- people actively seeking a new service or those who have moved homes or offices. Claria uses databases and keyword searches to identify them. The banner's call to action is to urge users to consider a better alternative to their existing phone service for saving money.

Next on the list are non-converters. These people were exposed to a similar Vonage campaign in the fall, but did not respond. This audience is asked to try Vonage now with a month of free service thrown in.

Finally, Claria sliders and pop-unders will appear a few pages after a user has completed a transaction over the Internet. For this online-bill-payer segment, the creative contains an element of shock: "You're paying how much for your phone service? Switch to Vonage."

All the Claria banners use Flash technology, without requiring special downloads. Users have to activate the voice feature, though the character already is moving its lips. They then click through the ads and are taken to the site at www.vonage.com.

Gern is confident that the banners will work. No matter the chatter, banners are ubiquitous, she said.

"The reality is that you have to work with these banners," Gern said. "These Oddcast characters follow your cursor. Their mouth is moving. These are Flash lip-synching files. It's Flash, this isn't a new format for people to accept. This was easy to use on Yahoo, too. There's nothing here that a publisher needs to worry about."

Carat has not set an end date for the campaign. But ads for the three other, undisclosed segments will overlap later with the older effort.

Vonage is a firm believer in online marketing, giving it the bulk of its media budget. Its customer acquisition tactics include long-term ad buys on major portals and networks, Unicast videos, search marketing, viral efforts and prospect development.

"In terms of e-mail marketing," Gern said, "at this point, we're not pursuing e-mail list rentals, but we'll pursue relationships with loyalty programs that use e-mail marketing to their member base."

Offline, Vonage relies on direct response television and radio, handled by agency Korey Kay.

"Right now, online is acquiring at least 50 percent of their customers," Gern said.