Battle stations ready as Telcos chase share

Australian consumers are set to benefit as Vodafone and Optus seek new ad agencies and prepare marketing offensives to take on Telstra’s dominance in the telco category.

Vodafone is readying for a marketing offensive as it seeks to take on Telstra's dominance.

The telco market is set to become a marketing battleground as Vodafone launches a search for a new advertising agency, following rival Optus, which is in the closing stage of its own pitch.

Vodafone has launched a competitive pitch, with six agencies facing off to help the brand develop a new strategy to attract new customers.

The TPG-owned brand, which is the third-largest for mobile customers and the second-largest for broadband, is working with pitch consultancy Trinity P3 with a view to appointing an agency by July.

The incumbent agency is Saatchi & Saatchi and Thinkerbell have also worked with the brand.

The move follows the appointment of seasoned chief marketing officer Rebecca Darley, who joined TPG in January from Domain.

Ms Darley is a respected marketing leader who has previously held senior marketing positions at CommSec, Westpac, Ikea and Vodafone, and she is understood to be pushing ambitious growth targets for the business as it seeks to return to its cheeky, challenger status in the market.

Vodafone currently has 5.5 million mobile subscribers and 2 million broadband subscribers. However, following its network expansion, which enabled it to enter regional and bush areas for the first time, it claims it has now doubled its coverage.

A Vodafone spokesperson said: “We regularly review our agency partnerships to ensure our creative and brand ambitions remain fresh and ready to challenge the status quo. As part of this process, we recently commenced a closed, competitive pitch process to explore new creative opportunities, so we can continue delivering the creative work Vodafone is known and loved for.

“We appreciate the excellent work Saatchi & Saatchi has done, particularly the Gary Network campaign and our Apple new product campaigns, which are held up as some of the best in the world.”

The Vodafone pitch is launching as rival Optus prepares to appoint new agencies following four separate pitches for its creative advertising, media, production and in-house agency accounts.

Optus confirmed a decision was imminent. “We’re in a procurement-led process with an expected outcome by June 2025,” said a spokesperson.

The final decision will come from Optus owner Singtel. However, with new chief executive Stephen Rue, who joined from NBN Co in November and new managing director for corporate affairs and marketing Felicity Ross, who joined from NBN Co in December, alongside long-serving marketing boss Cameron Luby, there is a clear mandate for change and growth.

The brand has already awarded a “special project” to Droga5, to create a brand strategy for the business, a sign which strongly suggests the agency is set to pick up the creative advertising account.

Optus is currently the second-largest telco for mobile customers but third-largest for broadband, and claims to provide customers with more than 11 million services across Australia each day.

Optus will need to move fast to get the jump on Vodafone, which will be biting at its heels to grow its market share. The TPG broadband business alone has a larger share than Optus’s, and it will be leveraging its expanded network to steal mobile customers from its bigger rivals.

Meanwhile, Optus will need to ramp up its positioning as the main contender to Telstra and will no doubt seek to unpick the market leader’s reliance on network coverage, particularly as satellite technology makes this less important.

Telstra remains the outright market leader across the telco sector with more than 50 per cent of the mobile market and about 45 per cent of the broadband market.

The brand has recently enjoyed a largely unopposed market voice, with its latest marketing campaigns dominating billboards, TV and cinema screens around the country.

The activity is part of a steady stream of work that has rolled out under Telstra chief marketing officer Brent Smart, which kicked off last year with the “Better on a better mobile network” animated TV ads during the Olympic Games. Telstra also launched a new brand platform, “Everywhere we go” last year which continues to roll out new executions.

The arrival of a slew of rival marketing activity will be good news for consumers, with price-based offers the only real tactic for the telcos to compete with each other, according to telecommunications analyst Paul Budde.

“The only reason why people switch from one provider to another is price,” Mr Budde said.

“Ninety-five per cent of people make a decision based on price and, if you’re lucky, they stick with you and don’t check the price any more. Telstra relies on this false loyalty, a lot of people that don’t bother to check prices and therefore their market share in mobile remains pretty high. Others like TPG, are far more price driven to try to get more market share.”

However, Mr Budde said the battle was marginal. “If we talk again in five years’ time, these percentages will only have slightly changed,” he said.

Mr Budde said the challenge for Optus was significant: the brand had been in the market for 30 years and had failed to advance far beyond the 20 per cent market share.

“It’s amazing that in all those years Optus has never been able to massively increase their market share,” he said. “It was 20 per cent in the 1990s and it’s 23 per cent now. For a long time it was a duopoly and Optus was 10 per cent cheaper than Telstra, and that’s the only thing they did. They didn’t want to rock the boat too much.”

Yet while the brands battle for share in the dwindling telecommunications market, the businesses are increasingly looking to artificial intelligence and tech infrastructure to bolster revenue.

“The telcos are becoming less and less important,” Mr Budde said. “It’s the Googles, Facebooks and Amazons that are taking the cream off of the market. They are the ones that are making the most money out of all of the communications market.

“There is a continuous decline in overall revenue in the telcos over the last five or 10 years and revenue-wise, they have not grown. The only way that they can keep the profit up is by cutting and technologies such as cloud and AI allows them to cut costs.

“The telcos are not winning in the new digital economy. They are being relegated to being the pipe and infrastructure operators.”