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Virgin Mobile Uses Advertising to Sweeten the Deal for Subscribers

Recently, Virgin Mobile added a little spice to its offering when it announced plans to give its customers the ability to receive free talk time by participating in mobile advertising and marketing campaigns.

The concept behind Virgin’s “Sugar Mama” offering is pretty simple. Customers can opt in to participate in mobile marketing and advertising in one of three ways: watch short online videos and give their feedback, answer questions using text messaging, or fill out brief surveys about brands, products and services. In return, these customers are rewarded with free talk time.

Important Demographics

A customer who signs up for “Sugar Mama” must provide Virgin with some important information, including phone number, zip code, age and gender. Although customers will need to top off their accounts every three months with at least $20; they can still earn up to 75 minutes of talk time every month through their input.

For some time, mobile marketing and mobile advertising have been wireless industry concepts that are “just around the corner.” Mobile marketing company ipsh! states that 12 percent of large U.S. brands have used some type of mobile advertising, but most of this usage has likely been promoted by the brand itself, with little carrier involvement.

Carrier Reluctance

While carriers have affirmed there is a place for mobile marketing in their offerings, they have been reluctant to push such activities on their networks. In a worst case scenario, the negative repercussions that accrue from allowing this type of marketing could mean an uptick in the number of angry subscribers who churn because of their frustration with the carrier that annoyed them with unwanted marketing messages.

Carriers understand there are certainly drawbacks to promoting advertising through their networks; some customers do not like advertising and feel they are being unduly pestered. Others still value the privacy of their mobile numbers and believe that ads are an invasion of their right to keep their wireless number very private. And still other customers are too busy to bother with advertising in order to earn a few minutes of calling time.

An Ideal Candidate?

Still the Virgin customer may be an ideal candidate for this type of offering. NPD data shows that Virgin Mobile, compared to other carriers, boasts a higher percentage of young subscribers who are, of course, mostly prepaid customers.

It is only logical that this type of offering is best suited for prepaid customers who tend to be younger and more price-conscious than the average subscriber. They also generally have more time on their hands and remain a very lucrative demographic group for marketers.

Equally important, the “Sugar Mama” offering is completely opt-in, which means that Virgin will not anger a customer by serving ads without permission.

Since this service is relatively new it is not fair to speculate on its potential for future success. But with the wireless services arena becoming increasingly crowded, it is unlikely Virgin executives would take such a gamble unless they believed it could be fruitful.

While Virgin will give away minutes, it will likely get back more money in advertising dollars than it will cost to implement the program.

Clearly, other carriers with a higher proportion of younger customers and prepaid subscribers will be watching Virgin’s offering closely to see if they, too, can also sweeten their deals, and bottom lines, with mobile advertising.

- Charul Vyas, Senior Wireless Specialist