DUBLIN, Ireland-European mobile operators realize they must work much harder to sell new subscriptions as GSM market penetration reaches saturation point, with no immediate sign of commercial third-generation (3G) applications to stimulate new demand. But operators firmly reject suggestions from vendor groups that they are not spending enough on promoting new and upcoming services.
The carriers’ marketing strategies came in for heavy criticism from the Global mobile Suppliers Association (GSA) at a recent mobile Internet conference in Paris, where it was alleged that potential General Packet Radio Service (GPRS) and 3G customers are not being targeted effectively.
“Operators have access to a wealth of data about the services customers are accessing, when and how frequently,” said Georgina Garrett, GSA information officer. “The key to market development is focusing on service provision rather than branding-the technology is in place.”
There is also more emphasis on retaining existing customers than attracting new business. “Our strategy is now focused on increasing the value of each user and retaining customers rather than making [customer] acquisitions,” admitted Marguerite Cremin, head of personal marketing at Eircell Vodafone.
Of course, many networks privately claim that as a vendor-led group, the GSA is trying to deflect attention from any shortcomings in production of suitable handsets. The operators also point out that customers are more mobile aware and less likely to be swayed by massive marketing hype than ever before.
BT Wireless, in particular, has been criticized by GSA members for using media coverage more than marketing spend to promote its services. William Ostrom, head of communications, said this is a logical response to an increasingly complex market. “Customers are buying data and video services as well as just voice, and we have to provide more information (for example, from media coverage) to the people selling those services. Of course, media information is also helpful to the end user.”
On the issue of whether media coverage is more valuable than advertising spend, Sara Harris, senior industry analyst at Strategy Analytics, said that one feeds off the other. “A newspaper article will reinforce the impression made by a billboard advertisement and vice versa, but both are required to create awareness among customers.”
Networks have become more newsworthy, largely on the back of the vast sums paid for 3G mobile licenses across Europe during the past 12 months, which has led to increased media exposure, according to Ostrom.
“Third-generation mobile is being led by the media, and admittedly, most of the marketing to date has come from the vendors.”
However, he said there is an obvious reason why vendors are spending more than the networks on 3G-related marketing. “The vendors are trying to secure contracts to supply handsets or network infrastructure to operators. Full network marketing of 3G is a little way off yet and will not happen until the services are closer to commercial launch.”
Operators have also learned the lessons of the Wireless Application Protocol (WAP), which he admitted was excessively hyped and promoted.
“Media coverage is not a replacement for marketing spend,” added Ostrom. “We expect to spend as much on marketing this year as we did in 2000, and we are still producing a large volume of commercials, for example.”
Harris said operators are being over-cautious in their marketing approach to GPRS and 3G and blamed their hesitancy on customer dissatisfaction with WAP. “However, you still have to hype new services-otherwise the operators are merely adding to the negative impression that has grown up among potential customers that there are no services worth paying for,” she said.
She also disagreed with the GSA view that an increased emphasis on branding is a mistake. “Branding is a positive development, because customers need to have faith in the company delivering the services.”
