Scrum for mobile customers

Media & Marketing:It used to be the case that O2 and Vodafone had the mobile phone market stitched up between them and thousands of new customers walked through the door every week. Not any more. Now the big two have Meteor and 3 snapping at their heels and developing the business has become much more difficult.

O2 is the second-largest mobile operator in the Republic with 1.6 million customers but through the first half of 2007, its revenue growth was just 3 per cent. The company's pre-pay customer base fell by 15,000 in the second quarter, but on the plus side, 14,000 new bill-pay customers were added.

Contrast this with Meteor, whose year- on-year growth in customers was 33 per cent in the year ending March 2007. As of last May, Meteor had 850,000 customers, though the vast majority of them are pre-pay subscribers.

But even if O2's growth is capped, it still has a nice business to protect. The company's annual revenue in the Republic runs to about €1 billion and despite all the competition, the operating profit margin is 35 per cent.

From the marketing perspective, it's very important for O2 that the company retains the customers it has because they are very profitable for the firm.

In charge of the marketing strategy is Damian Devaney (40), O2's new marketing director.

Sligo-born Devaney secured a BA and graduate diploma in business administration from University of Limerick and has built up an impressive CV, having worked in Georgia Pacific, Bank of Ireland, Eircom, Gilbeys, Guinness and Coca-Cola.

Devaney's first task is to help O2 to maximise its sponsorship deal with Ireland's international rugby team during the Rugby World Cup, which begins on September 7th.

While Devaney inherited O2's five- year sponsorship agreement with the IRFU, he is planning to put a lot of O2's marketing eggs into the world cup basket.

For 10 weeks from September 7th, O2will run an advertising and marketing blitz across TV, outdoor and the web, as well as in its retail stores. The campaign is fronted by legends - Willie John McBride, Ciarán Fitzgerald, Simon Geoghegan, Keith Wood - and today's stars, Brian O'Driscoll and Paul O'Connell. The creative agency is Cawley Nea, and Starcom Mediavest is the media buyer.

Unfortunately for Devaney, World Cup rules prohibit teams from displaying sponsor logos on their jerseys during the matches. That's so as not to distract from the official sponsors such as Heineken and Toshiba.

Devaney says: "Of course having our logo on the players' jerseys during the matches would mean increased awareness for O2, but the cut-through and the appeal of our ad will make up for that."

Devaney won't comment on how much O2's rugby deal is costing the firm, although industry speculation is that the IRFU has extracted €15 million over five years. But do such sponsorships actually convert consumers into customers or do they just retain loyalty?

Mark Lee, sponsorship director with event manager Platinum One, says that depends on the sponsorship.

"With the Guinness sponsorship of the hurling championship, the primary objective is to keep Guinness drinkers and not necessarily recruit them.

For O2, I would imagine the primary objective is a reappraisal of the brand. In the short term, I doubt it will mean more customers. Sponsorship is long term, there is never an immediate result. However, somebody is making a choice between Vodafone or O2, and they happen to be a rugby fan, the rugby association may influence their decision."

One of the risks with sporting sponsorships is that the team could underperform. If Ireland don't reach the quarter finals of the Rugby World Cup, then obviously O2 won't get as much "cut-through" and brand exposure. But if they win the cup . . . no doubt that's something Devaney dreams about.