Can Vonage Get Growth Without Buying It?

from the or-will-it-be-slowth? dept

Wed, Sep 13th 2006 8:22am — Joseph Weisenthal

One of the main reasons that Vonage has had such financial difficulties is its enormous customer acquisition costs, a result of its ad spending online and on TV. But a new analyst report notes that the company has been paring back its ad spending, and has dropped off of the list of top 10 online advertisers. It's not completely clear why the company has pulled back; it might be looking to save money, or it might redeploy its cash to other marketing avenues. If it's the latter, it could be a sign that the online ad market is getting expensive, as so many companies are rushing to market over the internet. If, on the other hand, Vonage feels that it should become more conservative with its spending, then this represents a critical juncture for the company. It obviously doesn't garner the same loyalty and word-of-mouth buzz as, say, Skype, but if the company is ever going to make money, it has to figure out a way to grow without constantly flogging its brand.

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22 Comments

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Vonage, 13 Sep 2006 @ 8:38am

I have Vonage, I think im going to go with Skype.. so my answer is no..
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Anonymous Coward, 13 Sep 2006 @ 9:22am

Maybe if they didn't infer their customers were morons who do nothing but make bad decisions, they'd get more customers. I'll never understand the "our customers are insane" ad motif that so many companies use.
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chris (profile), 13 Sep 2006 @ 9:41am

here's a suggestion, drop your prices!!
vonage is the biggest VOIP provider, but compared to LINGO, viatalk, and even skype, they are hella expensive.

i wen to tsign up with them and couldn't get a number in a 513 area code, but i got cheaper service and the area code i wanted from lingo, happy customer ever since.

i even disconnected my house's DEMARC from the cincinnati bell network and hardwired my adapter into the house's phone lines.

i am looking in to moving to a cheaper provider that is more BYOD friendly, like viatalk.

(BYOD = Bring Your Own Device)
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kelly, 13 Sep 2006 @ 9:41am

if they had spent zero dollars on advertising last year, they still would have lost money. "we may be losing money, but we're going to make up for it with volume." good luck to anyone that invested money in that sinkhole.
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Mark, 13 Sep 2006 @ 9:49am

Re: here's a suggestion, drop your prices!!
So, you opened up the Telco's grey box - Isn't there a note on the box telling you not to!?

BTW, I did the same. Dont need any stray 30mw pulses frying the vonage adapter.
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William C Bonner, 13 Sep 2006 @ 9:57am

I've been happy with Vonage
I've been using Vonage for several years now, and am generally happy with the service.

I'm paying ~$17 after taxes a month for the minumum service they offer. I don't know what their costs work out to. I know they subsidized the hardware on my end, and most of the calls I take are probably not to Vonage customers, so there are telecom interconnect fees involved.

I'm paying ~$50 a month for my cell phone, and ~$50 a month for my internet.

From my perspective, Vonage's main competition is dropping my home phone altogether.

My family is in Idaho, and vonage doesn't offer telephone numbers in Idaho. If they did that, I'd recommend my parents get Vonage.
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Mike, 13 Sep 2006 @ 10:04am

I heard they are coming out with a new marketing campaign, maybe that’s why they are cutting back on the on-line advertising, it was getting a but over crowded with Vonage ads on line.

And HEY Chris, did you actually check the Vonage website or call them to find out about that area code, they have 23 towns with service in that area code.

I have been a Vonage customer for two years and the only problems I have ever had was when my internet connection started giving me issues, switch to a different ISP and all was good again.

Next week I will be moving to a different state and I get to use one of the coolest features of VOIP that all those cable and phone company VOIP services can't offer, I get to take Vonage with me!! One less service to disconnect and find a new provider for.
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Anonymous Coward, 13 Sep 2006 @ 10:09am

I have been using Vonage for a year now. Sure the customer service is pure shit, but the tech works. I disconnected my house from the demarc as well and wired the router into my home phone system, and am glad I dont have to pay for long distance or $47 a month to QWEST for basic service.

That's the bottom line.
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Anonymous Coward, 13 Sep 2006 @ 10:26am

Tech does work
I'm on my thrid router in less than four weeks. I'm calling to cancel and trying my hand at Comcast Digital Voice...
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Rick, 13 Sep 2006 @ 10:30am

vonage music
For what it's worth, I have the Vonage IPO offer MP3 in my music playlist, and I play it on occasion.

Other than that, I don't see much of a point to their existence.
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John, 13 Sep 2006 @ 10:34am

Price
I'm just moving into my first house and I'm pretty sure I'm going with Skype. I don't think any other VOIP service has prices and features that outweigh the phone companies.

Those WIFI phones are looking pretty awesome. And really, all I want is a second phone number so I don't have to hand out my mobile number to everyone I run into.
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Ben Lockett, 13 Sep 2006 @ 10:54am

Growth = Good Service
I've been a Vonage customer for about 5 years. However, their time with me as a customer is close to being over. Their inability to provide a consistently reliable service means that I cannot rely on it for my business.

Maybe this is a problem for VOIP across the board but I think that if Vonage wants to maximise revenue it should maximise quality first.
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Anonymous Coward, 13 Sep 2006 @ 11:11am

Just wait. E911 service does not really work, and sooner or later someone will die because of it. The headlines will reappear in the Wall Street Journal, and then the FCC will come back to the issue. It won't matter if the person had VoiceWing, CallAdvantage, Vonage, etc. Sooner or later it will happen, and the FCC will be forced to do something, and this time they won't be able to let the providers off the hook.

E911 does not work 100% with any company, no matter what Vonage says. They are already mandated to do so, and when the next death happens, it won't be pretty. The big players will be able to deal, but pure play providers will be toast.
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Anonymous Coward, 13 Sep 2006 @ 11:12am

Ben, Vonage can't guarentee quality because they don't own the pipes. If you want guarenteed service, that means QoS.
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Emile, 13 Sep 2006 @ 11:13am

Re: here's a suggestion, drop your prices!!
Hey Chris,

Consider Broadvoice. I've been using them for about 2 yrs now and have been ok with the service. Last year they had a bunch of bugs but ever since it's been very smooth. They are EXTREMELY BYOD friendly - I have a Sipura 2100 (I think). Their BYOD plans start at $5.99 and you can easily get by with a $9.99 plan. Their top of the line plan is $29 but they have more features than Vonage or any other company, period.

http://www.broadvoice.com/
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Mike, 13 Sep 2006 @ 12:55pm

What
Why have a home phone with all the cell phones?
I pay a stagering 45 dollars a month for my cell phone. Internet is around 40 for RR.

Why bother with a home line? Hell even with my wife on her cell phone 24/7 it's all still more cost effective then stupid hard wired garbage.

If I could get a better internet connection through my phone I would drop my home Cable line aswell.
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Ben Lockett, 13 Sep 2006 @ 1:52pm

Re:
And therein lies the problem.................
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Todd Henkel, 13 Sep 2006 @ 6:52pm

Still maturing...
Vonage does have a new marketing plan from what I saw on TV today... but that is not the the only cause of their problems...

Like telecoms of the late 90's, cash burn is too high to sustain operations. No automation exists to support revenue per customer. Too much effort expended not only to gain new customers, but also to turn them up and keep them happy.

And for those customers expecting platinum level customer service, what should be expected for $15/mo? That is less than most households spend to rent movies. People need to realize you get what you pay for.

Since everyone focused on price per minute versus quality of service, that is exactly what is delivered via VoIP, wireless or landline.

And if you risk your your business on the cheapest sub-residential quality VoIP available right now, you should know you risk losing customer calls. Next month also try printing an ad campaign on tissue paper to save a few bucks.
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Chris, 6 Oct 2006 @ 5:40pm

better cheaper
I have recently switched to a VoIP company called Igonet. Much better service than Vonage and a buck cheaper.
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ewre, 30 May 2009 @ 12:32am

rrrr
Steel and aluminum scaffolding for construction is a very useful tool. How's China printing industry developed this years, who can tell us? China based injection molding services with low costs and supeior quality
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dumb haddoct, 16 Jan 2010 @ 1:51am

are u kidding me...lol
Yes. I don’t believe Vonage can get any growth. PERIOD! My premise being; it stared with a technologically dependent game plan. They are reliant on an esoterically land locked cable companies (a.k.a. now referred to an I.S.P.’s or dot com’s providers – (Comcast and Verizon) - meaning a landed locked - by local public municipalities. Also they (Vonage) were trying to exploit a technology that was already implemented, tried, and proven by well established and/ or by earlier internet providers, such as, AOL and Yahoo via IM. Vonage is trying to exploit or piggie back on an existing platform they have no control off... its like long distance phone coverage on another telecommunication’s platform, such as AT&T when they where relegated to just long distance provider and then NYNEX or GTE had to provide local coverage then go through AT&T or the late up coming MCI (world com – scum bags) ….
BTY: I have no affiliation with any companies mentioned, past or present.
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shuz but, 16 Jan 2010 @ 2:00am

Re: are u kidding me...lol
hey moe... what's up
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