Category Update
Wireless Providers Pay As They Grow For New Deals
U.S. Prepaid Wireless Subscriber Growth
: Companies in the wireless telecommunications category have continued their significant sponsorship activity while spending by other active industries such as financial services and autos has been impacted by the economic crisis.
But within the wireless sector in the U.S., one segment may be in the best current position to add new partnerships: prepaid.
Providers of mobile phone service that doesn’t require contracts or credit checks are seeing growing interest from beleaguered consumers looking for ways to trim household expenses.
According to researcher Yankee Group, the number of prepaid subscribers is expected to grow 13 percent this year compared to three percent growth for contract subscribers.
The firm expects the number of prepaid subscribers to total 59.7 million in ’10, up 21 percent from 49.4 million in ’08 (see chart).
“Prepaid is definitely resonating, and one of the reasons is the economy,” said Jayne Wallace, vice president of communications with Virgin Mobile USA, Inc., a major prepaid provider. “We have always had a budget-conscious message, but now more people don’t have credit cards and can’t get postpaid phones.”
Virgin Mobile noticed its subscribers starting to cut back on purchases of ringtones, images and other “extras” in the middle of last year, Wallace said.
With the possibility of taking market share from contract services looming large, the prepaid category has seen a flurry of new brand-building deals over the past several months, spanning pro sports teams, music tours and nonprofits.
Some examples: Cricket Communications, Inc. recently signed a new partnership with MLS Real Salt Lake; MetroPCS Communications, Inc. last month announced a tie to the NBA New Jersey Nets and the Barclays Center, the team’s planned new home in Brooklyn; and Virgin Mobile is presenting Britney Spears’ 31-stop Circus tour.
On the nonprofit front, Cricket this month announced a two-year, $100,000 sponsorship of the YMCA of San Diego County, while Virgin Mobile is wrapping up a first-quarter partnership with Susan G. Komen for the Cure.
Three Factors Drive New Spending
The recent spate of sponsorships has been fueled in part by the confluence of the following factors:
Opportunity to tout low-cost plans. Prepaid providers are rolling out new monthly service plans that offer unlimited calling and texting at prices significantly lower than those offered by traditional wireless carriers, and they are looking for opportunities to promote those products.
For example, MetroPCS will take title to the upper bowl of the Barclays Center to promote its value proposition. Tickets in the MetroPCS Pavilion will be less expensive than other seats in the arena.
“We like the idea of being associated with a value-oriented product that gives consumers the most entertainment for their dollar,” said Dan Olmetti, vice president and general manager for MetroPCS’s New York region.
In addition to promoting their differences from traditional wireless plans, prepaid services also are using sponsorship to hype some of their similarities, such as a wide selection of handsets–including smart phones–as well as data plans and other products not previously associated with prepaid.
Broader target audience. While prepaid companies have historically targeted those in their teens and 20s–and thus sponsored action sports, rock and hip-hop music and other youth-skewing properties–they are broadening their reach.
“Times have changed and we believe that the prepaid market as a whole has greater potential than just the youth market,” said Matt Carter, president of Boost Mobile, LLC, in a statement.
The division of Sprint Nextel Corp. unveiled its national “Unwronged” ad campaign two months ago to promote its new $50 Monthly Unlimited plan to a wide spectrum of consumers.
While maintaining some of its young-adult-focused sponsorships, such as title of a freestyle motocross demo tour and endorsement deals with numerous action sports athletes, Boost Mobile also deploys street teams to mass-market events such as NASCAR races, fairs, festivals, parades, college basketball tournaments, auto shows and others.
Market expansion. Prepaid companies are using sponsorship to build a buzz in new markets.
For example, the MetroPCS Nets deal was part of the company’s launch of service in New York City and northern New Jersey. The company also recently entered other markets in the Northeast, including Boston, Philadelphia and parts of New England.
Similarly, Cricket is expected to sign deals to promote its recent entry into the Chicago market. The company has already touted its presence in the Windy City with a promotion featuring a 15-foot replica of a Samsung Messenger phone.
Cricket sponsors a handful of properties in existing markets, including the Cricket Campus Rail Jam snowboard tour; title of minor league baseball’s Triple-A All-Star Game in Portland, Ore.; the Cricket Wireless Pavilion in Phoenix; the Cricket Wireless Amphitheatre in Chula Vista, Calif.; and presenting status of the Pearl Concert Theater at the Palms Resort Casino in Las Vegas.
Virgin Mobile Swaps AFL For Britney
Taking the cash it would have spent this year to sponsor the on-hiatus Arena Football League–including money it had allocated for new deals with a handful of AFL teams–Virgin Mobile late last year negotiated an estimated low-seven-figure presenting sponsorship of Spears’ tour.
In addition to gaining media exposure through the association with the pop icon, the company was drawn to the sponsorship’s ability to provide consumer touchpoints in local markets.
Virgin Mobile is activating the sponsorship in a number of ways, including a contest that offered tickets to a private dress rehearsal in New Orleans prior to the tour’s March 3 kick-off.
The company also has teamed with radio stations in each tour market to give away tickets and access to VIP lounges. It also ran a promotion on Britney.com awarding tickets to select fans who posted videos of themselves posing as Spears.
At each concert stop, Virgin Mobile vignettes play on giant screens during Spears’ four costume changes, while the company’s Virgin Angels conduct product demonstrations and distribute coupons.
The tie also includes exclusive content, with VirginMobileUSA.com hosting the exclusive premier of Spears’ “If U Seek Amy” video for 24 hours.
In addition, the service provider also is using the sponsorship to promote its month-old Take Advantage branding campaign touting the advantages of prepaid over postpaid service. The company plays the ad before “If U Seek Amy” clips on VirginMobileUSA.com, Britney.com and YouTube.com.
Ironically, Virgin Mobile also is using the sponsorship to promote that it now has a postpaid offering as a result of its August acquisition of mobile service provider Helio LLC. The company lends its Helio Ocean 2 smart phones to concertgoers on site to blog, IM, email and post photos to social networking sites.
The former Helio LLC was a mobile virtual network operator–as is Virgin Mobile–meaning it resells airtime obtained from owners of wireless networks.
Virgin Mobile also sponsors in conjunction with retail partners to promote limited-edition phones.
For example, Virgin Mobile and Best Buy Co. are wrapping up a Komen partnership on behalf of a limited-edition LG Pink Flare phone. The two companies pledged a $5 donation to the nonprofit for each phone sold at exclusive retailer Best Buy, with a minimum donation of $150,000.
Virgin Mobile and Best Buy last year offered a Virgin Mobile Festival Kyocera Wild Card phone, which came with preloaded music by artists performing at the three-year-old Baltimore music fest. Consumers who purchased the phone also were entered into a contest to win tickets to the event and the chance to meet Virgin Group Ltd. founder Richard Branson.
Bob Stohrer, Virgin Mobile USA’s chief marketing officer, oversees the company’s sponsorship activity.
MetroPCS Plans Additional Big Apple Deals
In addition to the Nets, publicly traded MetroPCS also is using music to promote its New York-area launch.
The telco has teamed with radio station owner Emmis Communications Corp. to create an integrated marketing campaign that includes ads on two stations, endorsements by on-air talent and title of the Five Boro Takeover Tour, a six-week concert series.
The concerts featured hip-hop and R&B artists such as Lil Wayne and Jazmine Sullivan and were held at Radio City Music Hall, Newark’s Prudential Center and outer-borough venues.
MetroPCS is activating the tie with on-site product demos and photo machines that offer co-branded picture frames. The events are hosted by brand ambassadors outfitted in purple, MetroPCS’s signature color.
The company plans to sponsor other events to build its presence in the metropolitan area, Olmetti said. “We’ll continue to be aggressive in the sponsorship arena, especially during our first year in New York City.”
Kern Egan, principal at Dallas-based Richards Sports + Entertainment, helps develop sponsorship strategy, screen proposals and negotiate and execute ties on behalf of MetroPCS’s New York regional office.
Egan currently has a half-dozen qualified proposals on his desk, Olmetti said.
Dallas-based MetroPCS sponsors sports teams and other properties out of 13 additional regional offices. Deals include the FedEx Orange Bowl; NBA Detroit Pistons and Florida’s BankAtlantic Center, home to the NHL Florida Panthers.
Sources
MetroPCS Communications, Inc.,
New York Region, Tel: 914/593-8500
Virgin Mobile USA, Inc., Tel: 908/607-4000