Internet phone service touted in $17 mil effort

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Phonefree.com celebrates Presidents' Day with the launch of its $17 million "Let Freedom Ring" campaign.

Phonefree.com, which enables users to conduct spoken conversations via the Web, hopes to lure consumers to its Web site with the new effort.

Hampel/Stefanides, New York, created the campaign, which is slated for a four-month run on national broadcast and cable TV outlets.

"Our first goal is to build brand awareness because a lot of people don't realize you can get free long distance through the Internet," said Phonefree.com Senior VP-Marketing Geoff Hatheway. "Our basic plan is to create a lot of interest and drive people to the site."

Phonefree.com hopes to benefit from consumers' frustration with confusing pricing plans and hidden costs of many long-distance providers, Mr. Hatheway said.

PHONE RAGE

"Phone rage is out there," he said, adding that free PC-to-PC phone service allows consumers to "liberate themselves from the shackles of the phone companies."

Phonefree.com offers an alternative to traditional long-distance service by providing free software that allows PC users to call other PC users. Consumers can use a microphone, speakers or a headset -- all of which Phonefree.com sells on its site -- to communicate with others who use the service. Phonefree.com also sells cameras for consumers interested in making video calls.

In addition to e-commerce, the company builds revenue by selling space to a variety of advertisers, including Web sites Altavista and APB.com, as well as the World Wrestling Foundation.

In its initial TV ad, breaking today, consumers burn their long-distance phone bills in protest. Voice-over plays up the "revolution," saying: "Long-distance calls won't just be free, you will be too." The spot ends with a shot of the Statue of Liberty's torch.

Radio also plays up patriotism, with one spot referring to Americans' right to free speech.

Hampel/Stefanides Copywriter Judith Roth said the agency wanted to depict a "grass-roots movement" in the initial phase of advertising. She added: "The hard part is getting people to believe the call is free."

To help get that message across, Phonefree.com's Mr. Hatheway said the branding campaign will be backed with other marketing support, such as direct response TV.

LAYERED EFFORT

"It's a new way to communicate, so we have to bring consumers along in steps," he said. "It's not a one dimensional campaign. We'll layer it in with a lot of other [marketing efforts]."

But "free" is the sticking point, since consumers still must pay local phone rates and their Internet service provider's fee, as well as a monthly electric bill to power their path to the Web. Once that's up and running, Phonefree.com exacts no further fees.

This latest consumer campaign follows a September radio and outdoor effort targeted at college students. The tagline for that effort was "Talk isn't cheap, it's free."

Phonefree.com is edging into the relatively new Internet telephony market as competitors Net2Phone.com and VacalTec.com also vie for consumers' attention. Market researcher International Data Corp. predicted Internet-based phone services will generate revenue of $480 million worldwide this year, and leap to nearly $19 billion by 2004.

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