marketing excellence 2 02 case study.pdf - The Marketing Society

Striking the right note with brand extension | O 2| Brand Extension | 5Determined to be differentIn 2007 the big six network operators — Vodafone,Orange, T-Mobile, 3, Virgin and O 2 — spent a total of£256 million on advertising. It is estimated that over50% of this was spent on direct advertising, mainlypromoting the latest tariff and handset offers.This was a market driven by the latest deals.Consequently, loyalty was hard to come by.Exacerbating this situation were two other factors.Firstly, the nature of mobile networks is theirintangibility. This lack of physical presence madeit hard to create brand affinity. Secondly, the mosttangible representation of the brand-customerrelationship was the payment. As any utility provideris aware, a relationship based on bill payment is notone that engenders loyalty.To drive allegiance, the brand required a moretangible and visible presence. Yet O 2 recognisedthat brand expression needed to be more than asimple badging exercise as per traditional brandsponsorship. What was needed was a true brandextension, which would enhance the customerexperience and provide a rational and emotionalreason to stay.Alongside this condition sat the complex and evermore important issue of convergence betweencommunication, technology, media and content.The convergence trend is perhaps best exemplifiedin the way music consumption has been transformedin recent years. Strengthening O 2 credentials in thisarena was therefore a key strategic opportunity.Risking the oddsBack in 2006, in a prime location on the banks ofthe Thames, stood a giant empty structure whichhad been unused since its inglorious incarnationas the Millennium Dome. Even at its peak, theMillennium Dome had never achieved anythingclose to popularity. Such were the connotationsof the Dome that any form of revival seemed purefantasy. Indeed, demolition seemed a real possibility.But then along came a visionary partnership betweentwo leading brands: O 2 in telecommunications andAnschutz Entertainment Group (AEG) inentertainment. For its part, AEG was looking for apartner with a UK reputation and stature to assistin its vision of creating a concert and entertainmentvenue not previously seen in Europe. At O 2 , a coreteam was convinced this partnership offered anopportunity to deliver a brand extension the likeof which had never been seen before.Unsurprisingly, this optimism was not universallyshared. There were grave concerns that the Domewould tarnish O 2 ’s hard-won reputation. The proposalhad to go to the company’s board of directors beforefinally being given the green light.In the end it was the high level of risk that helpedclinch the deal. O 2 realised that with both partnersdependent on each other for success, this was apartnership that could be shaped to deliver beyondtraditional expectations. In the three years beforethe venue was launched, both parties worked closelytogether. While AEG’s expertise lay in the venue’s

6 | Brand Extension | O 2| Striking the right note with brand extensioncontent, O 2 focused on ensuring the design reflectedthe enhanced customer experience that it soughtto deliver.By the time it was ready to be launched in July 2007,the venue boasted a 22,000-seat arena and a moreintimate 2,000-seat concert hall, named ‘The IndigO 2 ’.In addition, O 2 designed exclusive customer spaces,including the Blueroom bar and the O 2 Lounge, whereaccess was granted through mobile bar codes. O 2also created ‘O 2 Angels’, a team of people trainedto greet and direct visitors.All these contributions were a powerfuldemonstration of O 2 ’s commitment to its customersat the venue. However, the O 2 team also recognisedthat for the venue to truly drive loyalty, there wasa requirement for a powerful pre-arrivalcustomer benefit.Creating strong customer bondsThe Priority Ticket offer was thus developed to giveO 2 customers a very simple but extremely attractivebenefit — the chance to buy concert tickets 48 hoursbefore sale to the general public.Beyond offering this VIP treatment, it would alsocreate a dialogue with O 2 customers while buildinga database of those interested in the Priority Ticketoffer. Customers could register their music andentertainment preference through the O 2 specialphone line (an interactive set of menu options thata caller selected from the phone key pad for moreinformation), or at the Blueroom site online.Creatively turning a negative into a positiveAlthough now The O 2 is an established part of theLondon landscape, at the beginning the proposedpartnership had been steeped in scepticism andworried about failure. So the creative strategybehind the launch had to fulfil three key criteria:• Ensure the name stuck and that “The O 2 ” enteredthe nation’s vocabulary.• Communicate that this was not a re-badgingexercise. O 2 was extending its brand into a newterritory with real customer benefits – mostimportantly, Priority Tickets.• Above all, create a sense of unassailableconfidence that it would succeed.The launch campaign focused on driving home theassociation between O 2 and the venue through TV,outdoor and print advertising (Figure 1).Because multiple messages had to be delivered,the advertising agency VCCP developed acommunications plan to run across all media(Figure 2). For example, the outdoor and printcampaigns forged a link between the new name andthe iconic image of the white tent. The 30-secondTV campaign was an opportunity to take the nationon a taster of the varied entertainment on offer atThe O 2 and communicate the Priority Ticket message.A second phase of activity in late 2008 focusedpurely on driving home the customer benefit ofPriority Ticketing through a multi-media campaign(Figure 3).Nor did the experience end when customers left thevenue, as they could re-enter the Blueroom onlineafter the event and download music, as well aswatching exclusive interviews and streamed video.

Striking the right note with brand extension | O 2| Brand Extension | 7Figure 1. Launch campaignFigure 2. Multi-media campaignFigure 3. Priority Ticketing campaign

8 | Brand Extension | O 2| Striking the right note with brand extensionWinning on every frontBy any reckoning The O 2 has proved to be aphenomenal success, as the myriad of positivepress articles have attested. However, this positiveendorsement was never going to be sufficient.For a brand that had, until this point, lived in theether, here was an opportunity to be touched,played with and talked to.1. Customer participationAt its most basic level, this was a brand extensionthat needed to become a successful music venue.By December 2007, just seven months after launch,The O 2 Arena had welcomed a staggering 1.4 millionmusic lovers. The O 2 is now the ‘world’s most popularvenue’, selling more tickets that any other venue inthe world and outperforming the legendary MadisonSquare Gardens and the new Wembley Arena. Themagazine Music Week voted The O 2 the arena ofthe year in 2008.2. Customer interactionThe O 2 database was equally successful: by the endof 2008 over one million O 2 customers had signed upfor Priority Ticketing. O 2 also sold out its allocation forover 50 pre-sale events, giving in excess of 180,000priority tickets to O 2 customers.Over the same time period there were over 100,000entries for The O 2 Blueroom competitions and100,000 live music downloads. On average, SMScampaigns received a response rate of 4%, whileemail campaigns achieved a significant 15%response rate.In fact, from the launch of The O 2 until the endof 2007 over 900,000 unique visitors spent timeon The O 2 section of the Blueroom, which wasdeveloped by the agency AIS. There was thusmassive uplift in customer engagement withthe brand: three months post-launch there wasa 263% uplift in pre-pay customers logging theirmusic preferences.3. Boosting brand perceptionThere were early indications that this success washaving a measurable effect on perceptions of the O 2brand. Those aware of The O 2 showed significantlymore positive attitudes to the brand on nearly allattributes. What’s more, as Table 1 shows, thebrand attributes most influenced by experience andawareness of The O 2 were strategically relevant.Brand attributes mostimpacted by experienceand awareness of The O 2(customer and non-customer)Provide a goodcustomer experienceHave the best range ofmobile handsetsOffer the best range ofservices for your lifestyleTable 1. Impact of The O 2 on brand attributes 2007Source: Millward BrownAverage improvementin attribute:non aware-experienced %+57%+51%+50%Is the leading phone network +49%Look after their customers better +49%Are networks that have betterservices than othersAre brands that are settingthe standards for the futureAppeal to you more thanother networks+43%+43%+41%

Striking the right note with brand extension | O 2| Brand Extension | 9Unprecedented return on investmentIn order to assess the impact of The O 2 on revenue,an econometric model was developed to look atthe impact on customer loyalty. This showed animmediate but lasting impact on churn among thewhole customer base. This equated to approximately10% for post-pay customers and 20% for pre-pay.Without taking into account acquisitions generated,the model calculated a return on investment of 26:1by the end of 2008.Perhaps the greatest testament to the success ofthis brand extension is the roll-out of similar venuesin other O 2 markets. In September 2008 O 2 Worldopened in Berlin, followed in December 2008 by theopening of The O 2 in Dublin.All images appearing in this case study are reproduced by permission of O 2 .

SponsorsAviva - 300 Years of InsightWe’re the world’s sixth-largest insurance group and the biggest in theUK, with 46,000 employees that everyday serve 53 million customersworldwide.We are committed to delivering one distinctive experience for ourcustomers. Wherever they are, we want them each to feel that “noone recognises me like Aviva”. Our global consumer research revealsthat most of our competitors are particularly bad at recognisingpeople’s individual significance. This research also tells us that smallhuman touches can make a huge difference to a customer’sexperience. Our aim is to make recognition the familiar quality thatdistinguishes Aviva from our competitors - just as Apple meansuser-friendliness and FedEx means reliability.“We know insurance isn’t just about policies’ and pensions; it’s aboutpeople. That’s why we’re making our customers the big picture, puttinga spotlight on them and our people. Putting customers at the heart ofeverything not only makes sense for them, it makes good commercialsense too.” (Amanda Mackenzie, Aviva’s chief marketing andcommunications officer)We are working hard every day to build the company around what ourcustomers want from us. That’s why Aviva now ranks among the UK’stop ten most valuable brands, according to the 2010 Brand FinanceGlobal 500 survey and that success is something we are looking toreplicate across the world.BT operates in over 170 countries and is one of the world’s leadingcommunications services companies. BT is a major supplier ofnetworked IT services to government departments and multinationalcompanies. It’s the UK’s largest communications service provider toconsumer and business markets and is made up primarily of fourcustomer-facing lines of business: BT Retail, BT Global Services,Openreach, and BT Wholesale.BT operates in a thriving, multi-trillion pound industry that spans thewhole world. In recent years the global communications market hasbeen focused on convergence, whereby the boundaries between telcos,IT companies, software businesses, hardware manufacturers andbroadcasters have become intertwined to create a new communicationsindustry.BT has evolved from being a supplier of telephony services to become aleading provider of innovative communications products, services,solutions and entertainment products. BT’s business customersrange from multinational, multi-site corporations to SMEs andstart-ups.More than 80 per cent of the FTSE 100 and 40 per cent of Fortune500 companies rely on BT for networking, applications and systemintegration. The National Health Service, Procter & Gamble,PepsiCo, BMW, Emirates, Fiat, Microsoft, Philips, and Unilever arejust some of the organisations working with BT.BT has been a driving force behind the success of ‘BroadbandBritain’. Thanks to the company’s investment, nearly every home inBritain now has access to broadband and in September 2009, BTannounced plans to more than double the availability of its fastestfibre broadband service.

MARKETING EXCELLENCE 2“A treasure trove of examples covering the whole waterfront, from launching new brands to revitalising, sustainingand extending established ones, and from insights to advertising and sustainability. Whatever your business, it shouldmake you proud to be a marketer, shake up your thinking and inspire you to go the extra mile.”Professor Patrick Barwise, London Business School, Chairman of Which?“This exciting book demonstrates how great marketing can solve the most difficult problems, through analysis,teamwork and creativity.It contains 34 fascinating case studies, selected from hundreds of high quality entries to The Marketing SocietyAwards for Excellence. Those involved had the determination to win, and the courage to think differently.An inspiring read.”Professor Hugh Davidson, Co-Founder, Oxford Strategic Marketing“This is the textbook, the toolkit and the manual for marketing excellence.”Cilla Snowball, Chairman, AMV BBDO“These cases are a great source to stimulate your thinking. Some will stimulate new thoughts, some will unlock ideasfrom the back of your memory. All of them however are great fuel for growth.”Keith Weed, Chief Marketing and Communication Officer, UnileverFeaturing 34 award-winning case studies from some of the world’s leading brands:Sky+ BT Business NHS Blood and Transplant Magners Change4Life alli O2 Waitrose KFC McDonald’s HovisBritish Gas Audi Marks & Spencer Virgin Atlantic Dulux Sainsbury’s Pedigree Thinkbox Harlequins More Th>nUPS Walkers Aviva ebookers Shell ICI Paints Channel 4 British Heart Foundation Keep Britain Tidy Ariel© Copyright The Marketing Society 2010. All rights reserved.This PDF edition is for the personal use of the purchaser who may print from it a single copy. It may not be reproduced, posted on intranets,extranets or the internet, e-mailed, archived or shared electronically either within the purchaser’s organisation or externally withoutexpress written permission from The Marketing Society. To share this PDF with colleagues at the same site or across multiple sites withinan organisation by email or via an electronic network please contact The Marketing Society to purchase an appropriate licence.in association withsponsored byTo download further case studiesor purchase the book, MarketingExcellence 2, please visitwww.marketingexcellence.org.uk orPhone 020 8973 1700