Virgin Mobile USA has named Interpublic Group of Cos.' Lowe Lintas & Partners Worldwide, San Francisco, as its first agency of record for an advertising account, with spending estimated at $55 million to $60 million.
The San Francisco-based wireless services startup, the latest progeny of Richard Branson's Virgin Group empire, plans to offer Virgin-branded wireless handsets and content services targeted to the coveted 18- to 24-year-old demographic.
The win is significant for Lowe's San Francisco office, which lost Sun Microsystems' $100 million global ad account last year. That loss was due to a client conflict resulting from Lowe's 1999 merger with Ammirati Puris Lintas, agency for Sun rival Dell Computer Corp.
"It's a very sweet win and it really validates everything we've been doing as an agency," said Buz Sawyer, president of Lowe, San Francisco. Lowe won the Virgin business after a four-month review that included finalists Black Rocket and Leagas Delaney, both San Francisco.
The Lowe office adds Virgin to a roster of entertainment and retail clients, including Walt Disney Co.'s DisneyQuest and ESPN Zone and Eddie Bauer.
Virgin Mobile USA set up shop in July 2000, and is on a fast track as Virgin seeks to establish a beachhead in the U.S. for wireless services targeting young adults. Virgin Mobile launched in the U.K. in October 1999 with a similar strategy and already has 700,000 subscribers, according to Rob Gray, director of marketing for Virgin Mobile USA. In Australia, Virgin mobile service began last October, while an Asian launch in partnership with Singapore Telecom, is expected later this year.
Virgin is in various stages of negotiations with six U.S.-based wireless carriers-AT&T Wireless, Cingular Wireless, Nextel, Sprint PCS, Verizon Wireless and VoiceStream-to form a joint venture in which Virgin, as a virtual network operator, will use the chosen carrier's wireless infrastructure and network. Virgin Mobile USA hopes to finalize an exclusive agreement with one of the six later this quarter. The carrier also will assume some co-marketing responsibilities.
If it's successful, Virgin could be the first brand to segment the growing wireless market among young adults. While marketers such as Nokia and Motorola have sought to reach this potentially lucrative niche with cool handset designs and colors, they haven't specifically tailored content and services to the demographic.
"A Virgin brand wireless service will embody all the Virgin brand heritage of fun, value, simplicity and irreverence," Mr. Gray said.
Virgin aspires to deliver wireless service nationally by October, but will most likely launch in just a few markets. It plans to cross-market its service through its 20 U.S. Virgin Megastores, and to offer travel promotions and other tie-ins with Virgin Atlantic, its airline. While it no longer owns the Virgin record label, plans call for cross promotion with Radio Free Virgin and V2 Records, a Virgin label. In addition to voice service, Virgin plans to introduce complementary content services.
The amount of money Virgin said it will spend on advertising for the wireless rollout appears aggressive for a company that has traditionally relied heavily on publicity and free media as marketing tools. And whether Virgin can become a wireless powerhouse in the U.S. remains to be seen.
The U.K.-based megabrand has had lofty ambitions before that haven't panned out. In 1998, it sought to take on Coca-Cola and Pepsi-Cola in the U.S. with Virgin Cola. At launch, Mr. Branson, well-known for his flamboyant hi-jinks, drove around Times Square in a tank, pretending to shoot a row of Coke cans. Today, Virgin Cola is barely a blip on the cola giants' radar screens.
Copyright January 2001, Crain Communications Inc.