It’s possible to see in O2’s diversification into financial services a Branson-like instinct for strategic brand-building. Which is all the more surprising as O2 is steered not by a gifted, marketing-savvy entrepreneur but by an international conglomerate called Telefonica – the Spanish equivalent of BT.
Or rather, not BT; nor France Telecom (which has made such a mess of the once formidable Orange brand). Telefonica has been careful not to swamp the entrepreneurial drive of its subsidiary with the bureaucratic culture of a state-run, or former state-run, utility. And it has paid off: O2 retains market leadership in the UK mobile market; has far and away the most distinctive brand; and continues to be a first-mover in strategic brand innovation, as befits a market leader.
What do I mean by this last point? The big mobile networks know they are on borrowed time. Mobile airtime, once so profitable, is becoming a commodity, partly thanks to increased regulatory intervention from the European Commission. Added value is now the name of the game. But technologically, this has not been straigthtfoward. Even 3G is quite clunky and despite the advent of more user-friendly smart phones like the iPhone, access to the internet (and data revenue streams) is not all it might be.
O2 of course scored quite a few points by being the one to seal an exclusive deal with Apple over the iPhone’s UK distribution. But where it has been really imaginative is in exploring brand-stretching possibilities. Buying the naming rights to The O2 (formerly the Dome) for 20 years was one such step. At a practical level, it gave O2 users venue discounts over the mobile platform. At a more strategic level, it presented O2 as a youth brand with a finger in the leisure sector pie.
Much the same sort of thinking can be seen in the launch of O2 Money. Although the product launch – two prepayable Visa cards – is modest to begin with, the same trademarks are in evidence. Cash Manager and Load & Go (as the two cards are called) will be particularly attractive to on-the-go youth (and their parents, so far as the control element is concerned), and provide another practical vindication of the mobile platform. More widely, O2 is making a strategic move into financial services at a time when trusted brands –and we’re not talking banks here, because there aren’t any – are at a premium. It is probably no coincidence that O2 has done the service-provision deal with NatWest, the self-same bank that underpinned Tesco’s successful foray into financial services.