2011: giffgaff, Launching New Brands - Case Study

O2 created an iconoclastic new brand to capture a digitally-savvy audience who rejected traditional network operators.

Key insights

• A powerful mix of entrepreneurialism and digital dexterity enabled mobile phone operator O2 to create a new brand to attract a sceptical but influential group of customers.
• This interesting new brand worked on a collective principle of incentivising its satisfied customers to recruit new ones. This emulated the mutuality embodied in social platforms such as Wikipedia to provide real value for customers while keeping operating costs as low as possible.
• Developing strong bonds with customers through this strong focus on simplicity, transparency and rewards has been a source of continuing insight and brand advocacy.

Summary

In late 2009 O2 created giffgaff, a SIM-only mobile network, to attract an audience of digitally-savvy consumers who avoided traditional networks. Its defining characteristic was the application of the community-powered model of social media sites such as Wikipedia to the mobile sector. Based on mutuality, giffgaff would not only offer great value, but would reward consumers financially and emotionally for their contribution.

Its journey began with a beta launch in November 2009 with a collection of weird and wonderful tools to draw in these tech-loving individuals. They could ‘hire’ these tools for free and bring them to life by making a video which they could then upload to YouTube. They were also incentivised to take part with the prize of a SIM card that offered free calls, texts and data for a year, along with cash prizes for sharing and creativity.

Following a successful debut, the public launch six months later was aimed at a more mainstream audience and focused on driving word-of-mouth through a tightly-integrated campaign. It achieved significant success despite its comparably small share of voice in paid media. The brand has since gone from strength to strength and boasts a base of committed members who continue to act as brand advocates by recruiting new customers.

Breaking the corporate mould

When O2’s head of brand strategy Gav Thompson attended a social media conference in San Francisco, he was struck by what would turn out to be a game-changing idea for the business. Inspired by the way that platforms like Wikipedia and Facebook were enabling new, non-institutional ways of doing things, he imagined a mobile network run on the principle of mutuality: one that rewarded its community of customers for doing much of the work normally done by employees. He could see a gap in the market for people who liked to get involved in different ways of doing things.

Back at head office, the analysts concluded there just might be a business in it. And so the idea of giffgaff was conceived: a mobile virtual network operator (MVNO) which would run on the O2 network and be owned by O2, but which would operate as a separate business and target a group of consumers for whom the O2 brand had little appeal.

The first step was to hire creative agency Albion to help transform what was still an embryonic idea and a rather thin business plan into a fully-fledged and profitable business.

The brief was dauntingly broad in scope:

• Define and name the brand.
• Identify and understand the target audience.
• Design and build the web interface.
• Help develop the business strategy and process.
• Create the launch communications.

Bringing the brand to life

The name chosen for the nascent brand encapsulated its essence: giffgaff, which is an ancient Scottish term meaning ‘mutual giving’, but which also sounds like it is describing a conversation: an apt metaphor for a social mobile network.

The big challenge was how to transform the loose principle of mutuality into a fuctional business model. giffgaff’s association with O2 meant that emotional rewards alone might be met with scepticism, so fuctional benefit was also created: ‘Payback’, giffgaff’s reward currency, which members could convert into cash, credit or a charity donation. More significantly, these pioneering members would provide customer service by helping new members with queries and problems. The goal was to deliver better and more efficient service than that of the big networks’ call centre model; one which could therefore offer much better value (Figure 1).

The concept of member involvement was key to creating a powerful value proposition. By removing call centres and big-budget advertising campaigns, costs would be kept low and savings passed back to members. It would give the brand the ability to beat the big networks on price and even match the budget competitors, but with an interestingly differentiated experience.

Key to giffgaff’s strategy is that it isn’t for everyone. Freed from the need to try and attract a broad audience, the brand could focus on creating an experience that really connected to that substantial niche of mobile users who weren’t being recognised by any other operator.

Banking on people power

Accepted wisdom said that launching this type of network would take two years. Because giffgaff didn’t want to wait that long, it decided to adopt the beta launch approach common with web start-ups to get the operation up and running within six months.

But launching before the technology platform was completely developed would only work if it could attract enough users onto the network to give it a good shakedown and create an embryonic community. Moreover, a beta test requires a certain sort of person: they need to be happy to put up with, and accurately report, any bugs in the technology in return for the ‘bragging’ rights of being first in. It was felt that those traits would be found among students, particularly at art colleges.

The result was a campaign which kicked off in November 2009. It was centred around the power of mutuality and participation with the introduction of ‘Tool Hire’. This involved a collection of offbeat tools that people could ‘hire’ for free and bring to life by making a video using them which could then be uploaded to YouTube.

Consumers were incentivised to take part with the offer of a VIG (very important giffgaffer) SIM card that offered free calls, texts and data for a year. To promote sharing and creativity there were five prizes of £5,000 awarded to the community-nominated winner of categories such as ‘most viewed’, ‘funniest’ and so on (Figure 2).

Although the barriers to entry were seemingly high – asking the public to create and upload video content had proved too great a stumbling block for many a bigger brand with a large existing customer base – the results after a scant three months were impressive:

• 156 videos.
• 615,116 video views on YouTube.
• 43,301 visits to the Tool Hire site.
• A reach of 1.2 million through primetime TV pick-up.

More significantly, the campaign began to lay strong foundations for the community-powered business model, with members proving themselves to be effective recruiters.

The first campaign made an impact in two critical ways:

• It showed that a strong appetite existed for a brand built on mutuality.
• It proved that the business model of communitybased support and acquisition worked as well in practice as it had sketched on the back of a napkin in San Francisco.

The community also proved to be a great source of insight. The members loved the competitive prices as well as the simplicity and transparency of the offering. But they had also shown an interest in additional products, particularly the bundled packages of calls, texts and data. This led to the development of ‘goodybags’, or bundles of texts, minutes and containing everything the members liked about other networks’ bundles without those elements they disliked, such as ‘unlimited’ not really meaning unlimited.

This emphasis on simple transparency proved to be a hit and a major draw for smartphone users. But what really created buzz and generated advocacy was the level of consultation with members on the make-up of the goodybags.

Moving towards the mainstream

After only six months, with the powerful combination of a working business model, a solid base of members poised to deal with queries and competitively-priced products for all user types, the time had come to leave beta.

To do that, a ‘hook’ was needed to win over a more mainstream audience, particularly those who might have been a bit baffled by the concept of Tool Hire. The launch would aim at driving online word-ofmouth about the brand to create activity through the low-cost acquisition channels, such as search engine optimisation, that the business model depended on.

For the first time, too, the brand was showcased offline as well as online to help validate the service in the eyes of this broader audience. The integrated campaign ran across digital outdoor, national press, online display and social media. It was based on the concept of ‘The Man’, a representation of the ‘establishment’ way of doing the sort of things that giffgaff and it customers were against. The caricature tapped into the cultural rage against bankers and fat cats in the wake of the recession and oil spills (Figure 3).

Because the main objective was to use offline not to drive acquisition but to create buzz, the campaign was run for only two weeks. Despite such a concentrated period, the results were strong. Even more promisingly, it ignited traffic in the non-traditional channels. Search traffic, for example, was still increasing 20 days after the paid-for media campaign ended.

Building on success

The ‘run by you’ community-powered model has continued to flourish and its success can be seen in:

• Excellent customer service. By the end of 2010 there were 8,000 questions asked with an average of five responses to each one. Questions were answered within an average of three minutes compared to the industry standard of 15 minutes.
• High levels of recruitment of members by members.
• Members creating new apps, holding events, building a wiki and even launching (and had upheld) an Advertising Standards Authority complaint when rival network 3 claimed that “no other network gives you more for £10”.
• Regular mobilisation for defence of the brand: for example, forcing the community review site Pownum to change its business model to allow free right of reply.

The company has also continued to improve the offering, for example by generating buzz and exploring new ideas in its experimental goodybags. In addition, each member has been provided with a unique affiliate page through which their own networks can order SIMs and which includes a selection of banners and buttons they can use across their online profiles.

The community has been well-rewarded for its efforts as well. For instance, in the November 2010 payout the top earner received over £900, with a further top ten earners making £450 on average. One member was even hired to join the giffgaff team.

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