Study: MVNOs appealing outside of target demographics

Mobile virtual network operators have definite target demographics that they’re trying to lure away from mainstream wireless operators with a unique approach to service and handsets. A recent study by Yankee Group and Compete Inc. shows, however, that some of the MVNOs are generating significant interest outside their target demographics, and some are doing better than others at attracting notice from the customers they want.
Disney Mobile, for instance, had a slightly higher level of overall awareness among fathers than among the mothers at whom the MVNO has targeted the bulk of its advertising, although it succeeded in drawing more women to its Web site. However, the survey of the online behavior of about 2,000 end users showed that Amp’d Mobile Inc. doesn’t appeal to males ages 18-to-34 at higher rates than it does the general wireless population-despite the MVNO’s emphasis on providing the type of content that the demographic is interested in. Helio L.L.C., meanwhile, has done well in attracting Internet-savvy social networking types, but most of the young males who are interested in the brand tend to only pay about $80 for a new handset. Helio’s three high-tech gadgets all are priced at $200 or more.
The study also showed an irony in awareness: two of the largest MVNO brands in the U.S., Tracfone Wireless Inc. and Virgin Mobile USA L.L.C., each had less than 50 percent awareness among those surveyed. Only 41 percent of respondents had heard of Tracfone, which has 7.5 million subscribers and helped Cingular pull in 2.4 million net new customers last quarter. Cingular resellers, which are dominated by Tracfone, contributed about 750,000 to that number. Meanwhile, only 37 percent of those surveyed knew of Virgin Mobile USA, which recently announced that it now serves more than 4.6 million customers.
Despite the early demise of Mobile ESPN, Yankee and Compete concluded, mobile virtual network operators probably don’t have to worry about having the plug pulled-unless their investors get nervous. MVNOs, they said, require a two-to-three year commitment before they can be expected to be profitable, with at least nine months to a year before initial judgments should be made.
Even so, Compete’s Andrew de Garavilla said, MVNOs face “a race against the clock to acquire customers,” which they’ll have to do by snatching churners away from the national operators.
“All the carriers are doing a great job of add-a-lines and developing gross add opportunities within the existing customer base, which will make it even harder,” added Ryan Burke of Compete’s wireless practice.
Since the study was released, Compete also has found that online shoppers who are looking for information on MVNO products increased 16 percent in 2006 compared to 2005. Some of the increase, but not all, de Garavilla said, was due to the fact that there were simply more MVNOs out there in 2006 than in the previous year.
“People are becoming more aware of these MVNOs, and it’s not just the early adopters anymore,” he said.