$137.8B U.S. ad spend for top 200 advertisers
The big four wireless carriers are on a mad dash to the bottom, when it comes to price. And Sprint has pinpointed the two targets for its latest maneuver: moms and the app-obsessed.
On Wednesday, Virgin Mobile, Sprint's pre-paid mobile brand, introduced a new phone plan that allows subscribers to customize and adjust their voice, text and data plans. The program -- Virgin Mobile Custom -- targets low-income shoppers and goes on sale August 9th, exclusively at Walmart. It's also aimed at parents, who can tweak usage for the plans, which start at $6.98 a month and extend to four lines.
Essentially, Virgin is creating a blank slate phone -- it can be stripped as bare as a customer wants or loaded up with apps.
Sprint's offering has another lure beyond price: for an additional $5, subscribers can claim unlimited access to one of four social apps -- Facebook, Twitter, Instagram and Pinterest -- or three music streaming ones -- Pandora, Spotify and SoundCloud. For $15 a month, they can get all the social media behemoths.
Sprint's move follows offers from Verizon and AT&T, in February, meant to grab or retain consumers who are seeing their phone data bills skyrocket. Earlier this week, T-Mobile, which kick started the industry's price cutting shuffle, unveiled a four-line plan boasting ten times the data access. In June, the fourth-placed carrier also added unlimited access to seven streaming services to one of its plans.
Sprint insisted it was not responding to its brasher rival (and possible acquisition target). "We've been working on this concept since February," said Angela Rittgers, VP-marketing for Virgin Mobile. "What we're doing is giving customers more flexibility in terms of what they want."
Earlier this month, CNet reported that Sprint was considering changes to its 'Framily' plan, introduced in February, that would remove unlimited data as an offering from the carrier, which is shedding subscribers as it oversees a major network overhaul.
The company said its newest plans will not gravitate to Sprint's post-paid subscribers. "We do think it's a powerful platform that could be leveraged in powerful ways," said Ms. Rittgers. "At this point, we don't have plans to extend it across the other brands."
To promote its new program, Virgin is leaning on the family-friendly aspects of the phone. Parents who purchase Virgin Mobile Custom will be able to limit the plans on a child's phone. For example, they can set it to shut down all apps and calls after 10 p.m. In September, Virgin will also introduce a feature that allows parents to control a child's phone from their own, with software powered by ItsOn, a venture-funded technology company Sprint began partnering with in June.
The carrier will run commercials created by Mother on Walmart's in-store network. It will also unleash the retailer's army of mommy bloggers.
Virgin selected its most popular apps for the plan and claimed the platform companies were not paying for the service. Ms. Rittgers said Virgin plans to add more apps to the package, but but did not detail which ones nor deny the possibility of paid arrangements in the future. At the onset, the program will run with inexpensive smartphones: two from LG and one from ZTE, a Chinese manufacturer.
Carriers in emerging markets have sold data packages that subsidize Facebook, Twitter and other popular apps. One former carrier executive said Vodafone tried a program similar to Virgin Mobile's in the U.K., but closed it down after six months because it failed to gain consumer momentum.
With its second quarter earnings on Wednesday, Sprint topped expectations in its second quarter earnings, reporting revenues of $8.79 billion and a net income profit, its first since 2007. Yet the company continued to bleed subscribers, losing 245,000 monthly subscribers, a slimmer number than the prior quarter.
In 2013, media spending from Virgin Mobile crossed $82.2 million, a 29% annual increase, according to the Ad Age DataCenter. Sprint's total ad spend reached $1.55 billion.
The carrier's expenses fell during the quarter, in part, from reductions in marketing, Joseph Euteneuer, the CFO, said on the earnings call.