How Vonage Phone Service Won the War
In war, as Erwin Rommel said, victory goes to the side that is the first to plaster its opponent with fire. In the same way, whoever bombards the consumer with their brand name, will achieve recognition and notoriety first. Once achieved, consumers are less and less likely to recognize new brand names. Vonage pulled out every last dollar from their investors, even going into massive debt to market their product day-in and day-out to make sure they were the first VoIP provider in every customer"s mind.Whether it"s the lucrative spot on ESPN"s world cup coverage, or the infomercials at night, Vonage is taking every opportunity to market their product. As I speak, you could most certainly bet there is a television ad going off for Vonage somewhere in North America, or thousands of people beholding Vonage images on their computer screens.
The irony is their success has been bittersweet. Perhaps Vonage is a good example of how mere brute force marketing can work too well! They have spent an amazing 90% of their revenue on marketing. I wouldn"t recommend such an extreme devotion of company resources, though perhaps Jeffrey Citron hoped to walk away with a hyped up IPO like in the days before the bubble pop. At any rate, Vonage definitely over exhausted their revenue and like soldiers who fire all at once without a thought to conserve, Vonage will soon find all their ammunition may run out.
Just as in war, this may be a moment for other VoIP to launch a coup d"etat, with an aggressive marketing campaign. Perhaps citing a lower price, or merely emphasizing superiority at this time would be smart as Vonage is nearly defenseless. Ironically, such a marketing threat may get Vonage to overspend their last remaining dollars and send them into remission.
While soldiers who are certain of reinforcements are emboldened, in the same way Vonage is facing a debt that can only be paid off with their wager: that the internet phone (VoIP) truly will be the next revolutionary product and give them the future support Vonage is banking on.
VoIP industry analysts expect half of America to be using it over the next decade. However, Americans always have been slow to adopt new technologies, and perhaps the product is being over-hyped.
Or maybe, just maybe, Vonage has a vision and has seen the dominant future of VoIP. In which case, Vonage is in a good position to be the leader in providing internet phone service to the 130 million households of America.