Smith On VoIP

I would not consider myself to be someone who watches a ton of TV. Instead of “watching” I am normally “listening” as I write, read, or surf the net.

Guess what I have not been hearing much of lately?

The Vonage WOO HOO theme song….

I can only imagine their $1 Million a day marketing spend has finally caught up with them. As their current financial situation remains rocky at best, I would think that we will be seeing or hearing even less of Vonage through mainstream media in the near future.

Another interesting Vonage marketing factoid:

It seems that Vonage has seemingly disappeared from the tops of the Search Engine Pay Per Click spenders on VoIP related keywords (very recent). On average Vonage was previously bidding $2 more per keyword then any of its competitors on a large variety of search keywords. Given Jeffery Citron’s previous strategy of drag racing (getting in early, spending huge on customer aquistion, branding, etc) is in full effect at Vonage.

This strategy in theory (and many times in reality) thwarts competition as it causes competitors to have to continue to spend heavy on customer acquistion (as much as two to three times what Vonage initially had to spend) while simultaniously Vonage will lower their marketing costs, which will increase cash flow, profitability, etc. This should “protect” Vonage because the barriers to entry and cost to compete are too high for most companies. It has worked before for Jeffery Citron and given that I have experienced a recent decrease in visible marketing, the second phase could very well be in play.

Hopefully the tightening of the marketing budget due to pressure from investors to bring the company closer to breakeven or profitability (did I just say that?) will result in a more creative approach to gain new subscribers. I think a more creative approach to customer acquistion would bring some much need good PR for Vonage. As we all know the less money you have the more creative you need to be…

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