Q&A: NetZero's President On New Strategies

Netzero-Welcome back, NetZero. The company that made a name for itself offering low-cost (or “value-priced”) home Internet services that were heavily reliant on phone-line dial-up returns to marketing with a new array of products and services -- going after infrequent mobile Internet users, who may only occasionally access the Internet in public areas but either don’t trust or can’t access other public WiFi spots. NetZero President Rusty Taragan spoke with Marketing Daily about venturing into a new area and marketing to a newer, urban target customer.

Q: Why branch into this area?

A: NetZero, since its founding in 1997, has always prided itself on bringing the Internet to the masses through value-priced Internet access. We have been looking for many years for the entry into the mobile space. After spending time looking at it, we found a terrific partner in Clearwire that allows us to do what we do best, which is to put out a product that’s more consumer-focused and allows customers to pick a plan that suits their data needs.We’re not forcing people to sign up for two years or have plans that deliver much more data than they really need. And we’re able to expand the Internet to a much larger group of people who were not happy with the options they have today. 



Q: How does this follow through on the brand promise you have set out as the low-cost/no-cost Internet provider? 

A: Once again offering the consumer of picking apl an that meets their needs. We see a lot of people out there who want access to the Internet to get their e-mail when they’re away from home. Many of them use public WiFi hotspots. We know there are a lot of security issues at those places and that the more people that are utilizing the public WiFi, the slower it’s going to be. This allows people to have a very secure, very fast 4G Internet session. 

Q: The tiers are such that that no-cost plan is pretty limited. 

A: It is limited to someone who wants to get on the Internet once in a while and wants to check their e-mails. We’re not targeting this to the business consumer. We’re targeting this to the Internet user who will range from a very casual user to a fuller user, which is why we give people the option. Because there’s no contract, we allow people to come in and try a specific plan. If it turns out they need more data, they can top up for that month or try a different plan. And there’s no charge for changing plans. Once again, this just makes it a lot easier for the everyday consumer to try a service that in the past has been in many ways cost-prohibitive in terms of the commitments they’ve needed to make. 

Q: So you see the target as different. Where’s the opportunity with general consumers, as opposed to the business consumers. 

A: We know that there are probably 100 million people who are accessing through public WiFi hotspots. And we know the more this goes on, the more they slow down. In the past, people who have wanted access didn’t really have a choice but to use the unsecure hotspots. This gives people the opportunity to continue to access the Internet with the security without having to spend too much money. We’re not looking as a home replacement service -- but more of one that you’re going to take with you. 

Q: What challenges do you have in the marketing of introducing NetZero into this mobile Internet category? 

A: We have a name. But frankly, it was much bigger a few years ago than it was in the past couple years. So we’re reintroducing the name to the general public. We’re going to have a multimedia advertising campaign. We had advertisements in the Chicago Tribune, the New York Post and the LA Times. We have a multi-market TV ad campaign that begins Monday. We’ll be doing direct mail. And we’ll be doing Internet advertising, which can be targeted to people on public WiFi hotspots.  

Q: What are the challenges of not having been in the market for a while? Consumers may have already moved on or selected their WiFi carriers. 

A: Most of the people we’re going after haven’t selected [those carriers]. We estimate fewer than 10 million people have mobile WiFi contracts today. They are primarily people who are willing to have a two-year commitment, and have $50 or $60 to spend a month. They’re businessmen and women. Our target is different. When you see our commercials, you’ll see what we’re trying to do is explain to people that at a very low cost we can help you get on the Internet mobile, and much more securely. You’re not tethered to the coffee shop. You’re not concerned about the security; you’re not concerned about the lower speeds. We’ve got a little bit of an education process, and that’s what you’ll see in our ads. 

Q: How, if at all, are you targeting your current subscriber base?

A: We began an intensive campaign with the 800,000 subscribers that we currently have; educating them as to what we can offer. There’s some overlap of the two. NetZero[’s home service] is more of a less urban, more rural market. This service is more skewed to the cities. 

It’s an evolution of the brand. That’s why we’re not set just going after the NetZero members. That’s why we had ads in the NY Post and Chicago Tribune. If you tune into the “American Idol” this week in New York, you’re going to see an ad that reintroduces NetZero to the world and introduces this new service to them. 

Q: In terms of reaching that new group, did you have to reevaluate the way you looked at customer segmentation?

A: It certainly is a different segmentation than we have for our dial-up service. We looked very closely at who has the capability of utilizing this service, who is buying this service -- who is using public WiFi today. We looked at people who currently have mobile broadband service, those who are using public hotspots and those who have iPads or laptops who aren’t taking them out of the home. It’s a very broad audience. It’s growing enormously, and we think we can tap into that growth. 

We’re trying to bring mobility to the masses. We’re going with the NetZero DNA of value-priced Internet access that’s customer-friendly -- that gives people the opportunity to try this without having to tie into a long-term contract. We’re convinced if you try it, you’re going to like it -- and you’re going to keep it.

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