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| eircom- BREAK FREE |
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Eircom's response to the threat of mobile use in the home |
Agency:
Client:
Team:
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McConnells
eircom
Ken O'Byrne
Padraig Burns
Anna Healy
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INTRODUCTION
This case study demonstrates how
an effective advertising campaign
persuaded, within 2 years, almost
200,000 Irish households to upgrade
their home phones and purchase a
new cordless phone from eircom. Thus
creating three new revenue streams
for the company and enhancing its
brand image.
BACKGROUND
In recent years eircom’s share of
voice traffic (phone calls) has been
declining. Some of this decline is due
to competition from other landline
operators (Esat home, Smart etc) but a
significant factor has been the
proliferation of mobile phones.
By 2002 over 80% of the population
had mobile phones. The implication for
eircom was a reduced share of the
phone revenue "pie" and an erosion
of the brands position as Ireland’s
leading telecommunications company.
Mobile was the sexier new kid on the
block. eircom couldn’t compete with
the convenience of mobile when "out
and about" but more worrying were
the choices people were making when "at home":
"4 in 10 mobile calls are made when a
fixed line was available; the key
reasons for choosing mobile in the
home are portability, caller display, and
inbuilt phonebook".
Amarach Research, April 2002.
eircom had to respond to the threat of
mobile in the home so they decided to
become a provider of cordless phones.
In 2002 63% of homes used a
traditional fixed phone and 37% used
a cordless (see chart 3). Sales of
cordless phones were stagnant and this
was bad news for eircom as the use of
cordless phones had many advantages
for the company: owners of cordless
phones were less likely to use their
mobiles when at home, people on
cordless phones spent on average 6%
more time on a call than if it was a
standard phone (Amarach, 2002).
So working with Siemens eircom
developed a cordless phone with much
of the functionality of a mobile plus
some additional features. The eircom
4012 cordless phone was launched in
June of 2002. It had a range of 300
meters, caller display, in-built
phonebook, text messaging, baby
monitor and speaker-phone. It retailed
for €149.
MARKETING OBJECTIVES
1. Increase cordless phone penetration
in Ireland from 40% to 45% of
homes by June 2004 i.e. sell 60,000
phones in two years. This would
increase company revenue as
follows:
• regain phone minutes lost to
mobile phones (while in the home)
• provide a 6% increase in "time
spent on the phone" when using a
cordless
• from selling the actual phones
2. Enhance the image of eircom as a
more progressive, modern
telecommunications company.
THE TASK
How do we balance both marketing
objectives? An aggressive retail
strategy may help us reach our sales
target but would it help the brand? A
more corporate tone of voice may help
the brand but would it sell phones?
The main benefits of the new
cordless phone were identical to the
benefits of mobile phones, benefits
which had been advertised heavily
over the previous 5 years; we needed
to develop advertising that engaged
the target on a more emotional level.
STRATEGIC SOLUTION
Qualitative research in late 2001 indicated that the benefits of the phone would be well received.
Consumers identified the key benefit as being "freedom to roam around the house". From this we developed the one word advertising proposition "FREEDOM". This thought manifested itself in two creative ideas: "Break Free" and "Generation". Animatics of both concepts were researched:
BMR Quantitative Research, March 2002
The "Generation" concept used a corporate tone to communicate the benefits through the use of abstract images. "Break Free" beat "Generation" on 21 of the 27 scores. More importantly "Break Free"
responded very positively to all our key issues:
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1. It engaged consumers: 83% said"the ad was memorable" 80% said"entertaining"
2. They knew it was an "Ad for a new home phone" 3.3 on a 4 point scale
3. They were "Interested in Purchasing" 2.9 on 4 point scale"
4. It was a "Progressive step for the brand" 3.2 on a 4 point scale |
THE IDEA
The advertising idea is based on the
Queen "Break Free" music video that
was popular with our target market
when they were in their teens. The
launch commercial parodies the music
video with the opening scene showing
our "Freddie Mercury" character
literally breaking free from his old
landline and catching a new 4012
cordless phone. As he does this he
sings the following lines from
the original song: "I want to
Break Free, I want to Break
Free, I want to Break Free
from your lies, Your so self
satisfied I don’t need you…".
Each additional tv commercial
illustrated the various features
of the phone.
We developed 5 TV
commercials: Hoover 40 sec,
Clothes Line 40 sec,
Phonebook 20 sec, Baby
Monitor 20 sec and Christmas
20 sec. All communication
carried a direct response
phone number. All characters
in the ads were played by Pat
Shortt, one of Ireland’s leading
comedians.
THE COMMUNICATION ACTIVITY
The TV was supported by radio,
outdoor and press. The idea seamlessly
worked below-the-line with the
striking image of Pat "in drag"
working well on direct mail. Life-size
cardboard cut outs were also used in
retail outlets throughout the country.
Radio used the "Break Free" music
track on all ads. Our target was adults
30 – 45.
THE RESULTS
The advertising campaign was an
instant and extraordinary success. We
asked Millward Brown to summarise
the tracking results for the "Hoover" commercial (our launch ad) in an
international context:
"83% recognition – only 6% of ads get a score over 80%, 78% branding – only 19% get a score above 70%, 91% enjoyment – only 1% get over 90%, 84% new information – only 2% get over 80%, 63% relevant – only 7% get over 60%, 82% believable – only 8% get over 80%, 88% appealing – only
5% get over 70%. Definitely one for the record books".
Carol Fanagan, IMS Millward Brown, Jul 03’ |
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| We had hit the mark on creativityand clarity of communication but we also achieved our objective of
enhancing the image of the eircom brand: 73% of consumers saying the advertising suggests "eircom is a very professional company" and 75% saying it suggests "eircom is a friendly and approachable company". These were the highest scores achieved for any previous eircom advertising campaign. |
Year 1 June 2002-2003
Total Sales 100,387 units |
Year 2 June 2003 – 2004 Sales 86,640 units |
The success of the advertising campaign led to immediate sales.The phones were launched in June and by Christmas we had sold 61,550 units. By the end of year one a remarkable 100,387 homes had broken free from their old phones and purchased a 4012. By the end of year two that figure had risen to 187,027 and cordless phone penetration in Ireland had risen from 40 to 57% of all homes.
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ROLE OF ADVERTISING IN DRIVING
SALES
Retail distribution did not drive
sales: eircom could not get
widespread distribution for the launch
as retailers did not want another
cordless phone in a stagnant market. A
lot of the initial sales (Chart 2) were a
result of the direct response number
on the advertising. Once retailers saw
the advertising they started
approaching eircom looking to stock
the phone. There was no price
advantage: our new phone was one of
the most expensive on the market. The
product was better than most on the
market, however the only way to
create awareness of this "better" product was through advertising.
Without advertising the cordless
phone would have just sat in the retail
store, looking like a mobile, and
dependant on cordless phone shoppers
to take notice. As previously stated
there weren’t any cordless phone
shoppers around in early 2002 as sales
were stagnant.
We surmise that without anyadvertising we would have sold a
couple of thousand phones to the
few cordless phone shoppers that
dropped into telecommunications
retailers. Instead we developed an
advertising/communications campaign
that drove the market and lead to
sales of 187,027 units in two years.
PAYBACK ON RETURN ON
INVESTMENT
Advertising spend (including
production) above and below-the-line
was €2.3 million over two years. The
4012 cordless retailed for €149 with a
profit margin of €22.71 per unit, for
eircom.
The increase in revenue for each
home that used the new cordless is
calculated by eircom at €18.86 per
annum. This increase in revenue is due
to the displacement of mobile usage in
the home and the increased time spent"on the phone" when using a cordless.
187,027 phones x €22.71 = €4,247,383
profit on phone sales
187,027 phones x 1 full year of use* x€18.86 = €3,527,329 additional phone
call revenue
* this is an average figure: some phones have
been active for 2 full years, some have just been
bought
This means that an investment of €2.3 million has, after two years,
gained a return of €7.8 million. And
this figure does not include the many
more years of increased revenue that
the company will experience based on
the increased use of the new range of
cordless phones or the invaluable
contribution the campaign has made
to the eircom brand image. I will leave
the last word to our clients
"Based on their experience in other
European markets Siemens expected us
to sell a maximum of 20,000 phones in
the first two years. The power of an
outstanding advertising idea meant we
sold 187,000"
Ken O’Byrne, Head of Consumer Marketing, eircom
"Without this campaign the success (of
the product) would not have been
conceivable. This campaign is now used
as a case study for other markets
around the world".
Clemens Rhinnebach – Marketing Director
Siemens HO Germany
APPENDICES
1. Very strong communication of the
cordless feature along with
reinforcement of eircom core values
2.The ad performs on strategy in
terms of delivering new and
different information. It also
generates strong emotional appeal.
3. Eircom compared call patterns for
one year pre purchase, with one year
post purchase, and calculated that
the value average increase in "time
spent on the phone" amounted to €18.86 per line per year.
SUMMARY
eircom became a provider of
cordless phones in 2002 with the
launch of 4012 phone.
It was important for eircom to drive
the stagnant cordless phone market as
cordless phones provided functional
benefits (portability, address book etc)
that displaced the increasing use of
mobiles in the home. Research had
also shown that people make on
average 6% longer calls when using a
cordless versus a traditional landline.
The advertising proposition centred
on the "Freedom" of the new phone
versus the traditional landline. The
results were instant. The "Break Free"
campaign achieved outstanding
tracking scores: "definitely one for the
record books" Millward Brown. The
sales were equally impressive with
61,000 phones sold within six months.
By the end of year two almost 187,027
homes had upgraded their existing
phones for the new cordless from
eircom. This paper proves how these
sales could not have been achieved
without the "Break Free" campaign. In
just two years the campaign has driven
cordless phone penetration in Ireland
from 37% to 57% of homes,
developed new revenue streams for
eircom, enhanced the company’s
image, and helped McConnells
produce some outstanding advertising.
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