O2 was born in 2002, a relaunch of the former BT Cellnet. Today, O2 is a completely different animal to its troubled predecessor.
In December 2005, it overtook Vodafone to become the UK’s leading mobile phone operator, with 16 million active customers. In an increasingly commoditised market, O2 has successfully stood out from the competition with an award-winning marketing strategy that has not only made existing customers more loyal but also helped it acquire more new users than competitors.
In January 2006, the success of the O2 group was reflected in the £18 billion paid for it by the Spanish telecoms group, Telefonica.
In April 2002, BT Cellnet was a troubled business, losing ground consistently to its competitors. Demerged from British Telecom in November 2001, O2 was to be launched as the new brand in April the following year. To succeed in a maturing and highly competitive market, and with a lower competitive spend than the more established players, O2 needed to launch and establish itself quickly and efficiently.
Our critical objectives at launch were to gain maximum awareness in the minimum time. To do so, we had to create a sense that O2 was all around, and that it was a brand that understood its customers. This required a new kind of brand and launch approach. Only complete integration would allow the brand to achieve this task.
O2 wasn’t a new enterprise, but it would be a new brand. The attractiveness of the brand would be fundamental to the future fortunes of the company, not only at launch, but as the brand matured in an ever commoditised market.
From the start, consumers rather than products have been at the heart of the O2 approach. Through research, it became apparent that consumers were tiring of pretentious or empty promises, and were adept at identifying and using only those aspects of technology that were relevant, tangible and available now.
O2 set out to become the most ‘enabling’ brand in the market, with the spirit of ‘Can do’ providing more ways in which the customer can work, play, communicate. This idea of putting customers, not the product, first, has always meant that O2 doesn’t try to force-feed consumers with product information
Only complete integration would allow the brand to achieve the difficult task of driving short-term initiatives and sales, whilst building a long-term brand. The campaign began with a brand ad to introduce the brand ethos to consumers but was quickly replaced by a series of product ads, each one a demonstration of the ‘Can do’ philosophy, wrapping the product communication up in the brand.
Growing up – a shift in strategy
With little left in the market as true differentiators, and with over 90% of the population owning a mobile phone, growth was not likely to come easily through further penetration. The real areas of innovation and competition have become price, service and brand affinity.
O2 recognised the need to reward and improve relationships with its existing customers, as opposed to focusing on acquiring more, and adopted a strategy to focus on improving customers’ experience of interacting with the brand and rewarding them for their loyalty. This strategy was encapsulated in the launch of our ‘World that revolves Around You’ campaign in April 2005.
In this respect, O2’s focus on customer loyalty and retention has been one of its most important innovations. Focusing on rewards, brand affinity and reducing the rate of defection has helped propel O2 into market leadership and upped the ante in the always-intense mobile phone war.
This comes through even more clearly in the most recent campaign designed to further put the customer at the heart of the brand ‘It’s Your O2. See What You Can Do’, launched in April 2006.
O2 has achieved a lot in its short four-year life. Rising to clear UK market leadership by the end of 2005, and commanding an £18 billion price tag in its acquisition in early 2006, it is clearly a brand on the ascendancy.
O2’s strong and consistent visual identity continues to pay dividends with their effective share of voice consistently outweighing their actual share of voice, despite a declining spend and in a more competitive category.
IPA effectiveness Biennial Awards named VCCP Effectiveness Agency of the Year (under £100m billings) in 2004, and VCCP were the first agency in the IPA Effectiveness Awards history to have won the Grand Prix on its debut for O2.
Indeed, econometric modelling in the paper found that O2’s integrated approach has paid for itself more than 60 times over, generating a staggering £4,700m incremental margin.
- Value of O2 quadrupled since launch from £4 billion to £18 billion
- The most successful mobile launch ever (Accenture)
- 50% of 02 base responded to 2005 ‘’Loyalty Rewarded' Campaign
- Grand Prix and Gold at 2004 IPA Effectiveness Awards
- Fastest growing FTSE 100 Company in past 3 years
- 3rd to 1st in market share in 2005
- O2 is the only brand in the Telecoms market to show and year on year increase in recommendation among both its pre pay and contract customers, and has the highest brand score in pre pay (80%).
Retail has just had its best week for postpay connections in more than two years. A great response from consumers to our new Long Weekend tariff was a big factor. It helped our 350 Retail stores get almost 8,000 connections over the week ending last Friday (August 4). The total number of postpay connections was 7,999 – beating the previous highest of 7,831 for the week ending 25 September 2004 by 168 connections.
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