Vodafone's reward is recognition

By Karyn Scherer

If you had asked New Zealanders a year ago who Vodafone might be, chances are most people wouldn't have had a clue. A few keen sports fans could probably have told you of its association with the English cricket team, and the Australian Wallabies. Even keener fans could probably have named its association with the Fiji Sevens.

It suddenly burst on the scene here in November, when it was announced the UK-based mobile phone company had paid $750 million for BellSouth New Zealand.

Initial surveys showed only 2 per cent of people had ever heard of Vodafone, which has bought itself around 20 per cent of the mobile phone market in this country. After just three months, the same surveys showed a recognition rate of 94 per cent. It is now 98 per cent.

Around 40 per cent of those surveyed now mention the name without being prompted. It's a figure that Vodafone's sales and marketing manager, Grahame Maher, describes as remarkable. "That's as high as BellSouth ever got to, in less than six months," he gloats.

Before it announced the deal, Vodafone toyed with the idea of retaining the BellSouth name in some way. In the end, it decided to go for a complete change -- all in one weekend. All traces of BellSouth's presence were replaced by Vodafone's distinctive fire-engine red logo. "I think that was the right decision in retrospect," says Maher.

To publicise the name change, it developed a campaign with BellSouth's advertising agency, Ammirati Puris Lintas, which used the catchphrase "great things happen when you change your name".

However, its main marketing weapon has been a string of high-profile sponsorships. Deals signed so far include its four-year contract with the Warriors; naming rights to the Silver Ferns, the Wellington Lions and the Dragon Boat Festival; and sponsorship of the Otago NPC team and the Canterbury Rugby Union First XV.

It is also supporting Olympic hopefuls Sarah Ulmer and Hamish Carter, and is taking over BellSouth's involvement in what is now known as the Heineken Tennis Open.

Although it has concentrated heavily on sport, it has also committed itself to other events such as the Variety Club Bash, the Hero Parade, and Auckland University's Summer Shakespeare. It has also agreed to support the Auckland Museum.

Maher is well aware of the international trend away from sponsorship, but he is making no apologies for the company's strategy. It is all part of Vodafone's global plan to become one of the world's biggest consumer brands, up there with Nike and Coca-Cola, he says.

Nevertheless, he believes it is crucial that the New Zealand company is seen as independent from its overseas operations, hence the emphasis on events and organisations which have a strong national or regional presence.

To be a candidate for sponsorship by Vodafone, the sport or organisation involved must be New Zealand-based. The company also prefers to support "anything that's mobile", as well as anything that is "young, a bit irreverent, or cool".

Its decision to replace DB as the main sponsor for The Warriors is its biggest deal and Maher is getting used to the stick he gets over it. He is well aware of DB's bitter disappointment with the team.

While he admits Vodafone would have preferred to back the All Blacks, he believes the Warriors is the second-best deal around. He is convinced the team will eventually come into its own.

Nevertheless, Vodafone is determined not to be seen as a sponsor who will only stand by a team when it's winning, he says.

"It's always better when someone wins, but we will support New Zealanders even when they're losing, which is part of a very important message. Teams can go sour on sponsorships and say because they're not winning, they're not loved.

They feel sponsors aren't really serious about sponsorship -- they just want the headlines. So we're very comfortable with our involvement, even when a team is not at its best."

One controversy it could have done without, however, was the fuss over the Mark Graham "but he played on" ads. The campaign prompted complaints from ACC and others that it glorified violence.

Vodafone inherited the campaign from BellSouth and Maher admits it probably would not have been given the go-ahead if it had had a say. In the end, it decided it was not worth pulling the ads, given that they didn't have much longer to run.

Between them, BellSouth and Vodafone committed themselves to more than $14 million worth of press, television and radio advertisements last year, according to ratecard estimates by ACNielsen. Telecom Mobile supposedly spent less than half that.

As a percentage of turnover, Vodafone spends less here on advertising and sponsorship than in a lot of other countries, and Maher believes the company may have learned an important lesson -- that it is cheaper to buy an existing
business than to set up a new operation.

He denies it will eventually drop some of its sponsorship deals as it becomes more established in this market. If anything, he says, it is likely to increase its budget. Whether all its millions will pay off in terms of increased market share, however, still seems to be an open question.

Two years ago, New Zealand had one of the highest rates of use of mobile phones anywhere in the world. It has now fallen behind many other countries. Over the past six months, use has grown from 17 per cent of consumers to 21 per cent, largely thanks to The Warehouse's decision to enter the market. But it still lags behind Australia's 36 per cent, and is nowhere near Finland's 60 per cent.

Maher believes growth has been restricted here because the two main players have been too busy fighting over the business market, and not concentrating enough on other consumers.

Just last week, Vodafone boasted that it had nearly doubled its number of Australian customers, from 545,000 to 972,000, in the year ending March.
It has set itself a similar target here. In November, it said it hoped to double its 130,000-strong customer base within 18 months.

Maher won't say how the plan is going. But he confirms the main issue for the company is how to turn its successful name launch "into something meaningful."

He agrees cost has been a major issue which has deterred many potential customers. The good news, he says, is that it is getting lower all the time.