INTERNET PHONE SERVICE VONAGE OPENS REVIEW

Total Advertising Account Estimated at $50-$75 Million

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SAN FRANCISCO (AdAge.com) -- Vonage Holdings, which offers telephone service over the Internet, has begun a review for an advertising account estimated to be worth $50 million to $75 million.

Voice over Internet Protocol
Vonage was one of the first companies to

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offer inexpensive long-distance phone service, known as Voice over Internet Protocol, or VoIP, to consumers who have high-speed Internet connections. Traditional phone companies such as AT&T and cable operators who provide Internet access are charging into the VoIP market. Telecom giant Verizon, Advertising Age's No. 1 Mega Brand, is reported next week to announce its own VoIP offering.

The review, just months after independent New York agency Korey Kay & Partners won Vonage's creative account, "is an opportunity to look at the total communications mix," said Dean Harris, Vonage's chief marketing officer. "We are the leader in the VoIP space and we will maintain our lead," he said. Vonage has about 220,000 subscribers, Mr. Harris said. AT&T, meanwhile, said it planned to have 1 million VoIP subscribers next year for its CallVantage service.

The incumbents
Mr. Harris said the review does not reflect a change of strategy. Mr. Harris, who is conducting the agency search in-house, said incumbents will be part of the review and contenders can pitch all or part of the business. In addition to Korey Kay, which handles offline creative advertising, the other incumbents are Freestyle Interactive, part of Aegis Group's newly formed Isobar unit, for online media buying and creative; and Inter/Media Advertising, Encino, Calif., for direct marketing.

Some 20 agencies, ranging from multinational networks to specialty agencies, are in contention, Mr. Harris said. The review will be narrowed to three to four agencies by the end of August, with presentations to be held middle to late September. Mr. Harris declined to confirm the $50 million to $75 million billings figure, although executives who received the Vonage request for proposals said spending was estimated in that range in the document.

Vonage, which has been using the tagline "The Broadband phone company," has centered its marketing on Internet advertising and humorous TV spots, most recently in a campaign that portrayed telephone executives whose lives have been ruined by the inexpensive long-distance service.

Vonage sells its service, which requires a connector box, through its Web site and at retail through Amazon.com, RadioShack, Best Buy and Circuit City.