Orange is one of the great marketing success stories of recent times but even parent company France Telecom (FT) admits the brand has lost some of its lustre.
In the New Year FT is bringing in Virgin Mobile founder Tom Alexander in a bid to rediscover the sparkle that made the operator the darling of the telecoms industry in the 1990s, but observers are in no doubt about the size of the task that lies ahead.
They believe Alexander, who has an enviable CV and a bank balance to match after the success of Virgin Mobile, must change the ethos of the entire UK business and “get its point of view back” if the company is to challenge market leaders Vodafone and O2. Orange UK is overhauling its marketing strategy in an effort to find that “voice” again (MW last week) following the appointment of Justin Billingsley as UK brand director earlier this year (MW July 5). Billingsley, a former Nokia and Coca-Cola marketer, will work closely with Alexander, who joins Orange as UK chief executive on January 1.
With 15.4 million customers and a 21.4% market share, Alexander is certainly not taking over a business in trouble. But the Orange of today bares little resemblance to the company launched by Hans Snook and Hutchison Whampoa in 1994. With innovative ideas, such as per-second billing and inclusive minutes, Orange revolutionised the industry and became a textbook example of how to launch a brand into a potentially monotonous sector with its iconic “The future’s bright…” strapline.
But many feel Orange began to lose its identity after it was acquired by FT for £25bn in 2000, which was followed by the departure of Snook in 2002. One industry source says: “Orange’s original vision came true. The industry moved on but Orange didn’t.”
Managing director of brand consultancy Dave, Dan Bobby, who worked on Orange at Wolff Olins from before launch until its sale to FT, thinks FT “squeezed the energy, creativity, risk taking and entrepreneurial spirit” out of Orange.
“The business has changed dramatically and has definitely lost its sparkle,” he adds. “Once you have lost it it’s incredibly hard to get it back. What you’re effectively talking about is a culture change. When France Telecom bought it they bought a customer base, rather than a brand – they didn’t understand what they were acquiring.” Bobby believes Orange needs to “get the brand back at the heart of the business”, as it was when Snook was in charge, if it is to return to the glory days of the 1990s.
Industry experts argue that Orange has become homogeneous under FT, with one source labelling it “Vodaclone”. They point to Apple as an example of a company that manages to be both corporate and quirky.
Billingsley admits Orange has talked too much about its products at the expense of its brand and vows to concentrate on what is unique to the company – such as its Orange Wednesdays film offer and its converged services – in 2008.
He adds: “This business was formed to take on the big ugly brands and then we became one of them. It’s very hard to get back your consumer champion voice if you are one of the big guys but we want people to know that if you’re looking for trust Orange is the brand you should be with.”
FT announced in 2005 that it was rebranding all its consumer businesses, from its fixed-line telephony offering to its internet service provider Wanadoo, as Orange. Ovum principal analyst John Delaney thinks that led to Orange taking its off eye off the ball.
“It’s a big move to turn a totally focused brand into something that is multi-purpose,” he says. “In the UK Orange has suffered from having been involved in that process. What made sense for France Telecom didn’t necessarily make sense for Orange UK.”
Orange is trialling a TV service that is likely to be launched in the UK in the middle of next year, a delay on its plans to launch in 2007. Delaney adds that the company has “quite a lot of pieces of the convergence puzzle” compared with its rivals but many question whether that should be the focus of the new brand push. Billingsley says Orange’s converged services are “ahead of the market” but acknowledges that the company must make them as “consumable as possible”.
Another criticism levelled at FT is that it stifles talent in local markets by flooding the businesses with French managers. One source says: “Orange is not short of talented people or good ideas but none of them ever seem to get through the France Telecom machine. They are applying a monopolistic mentality to a market [the UK] that is not like that. The problem is people working for Orange in the UK feel stymied.”
However, it seems that could be about to change. In August, Olaf Swantee was appointed to run Orange’s global mobile operations after Sanjiv Ahuja’s decision to leave after four years. The fact that Swantee was appointed from outside the company – he joined from Hewlett Packard – was seen as significant.
He immediately focused on Orange’s UK business and, soon after the departure of the company’s broadband chief Eric Abensur, the entrepreneurial Alexander was appointed as the UK chief in a move that shocked the industry.
Alexander founded Virgin Mobile in 1999 with backing from Sir Richard Branson but a tiny budget. The “virtual” network – which leased capacity from T-Mobile – rapidly became a major player in the UK by targeting cost-conscious teenagers with irreverent advertising and cheap tariffs. Alexander led the flotation of the business in 2004 and the sale of the company to NTL – now Virgin Media – last year, reportedly walking off with £20m.
Alexander replaces Bernard Ghillebaert, who became chief executive of Orange UK in 2004 and will take a senior role at Orange Group. Swantee cited Alexander’s “big brand” experience when announcing his appointment and added: “I want to make sure the person who leads the UK is part of the community, lives in the society every day of the week, and understands it.”
Billingsley says one of Alexander’s main goals is to get Orange’s “mojo” back internally. “Tom wants to build a sense of togetherness and pride,” he says. “It takes strength of personality to drive change – you need people who have a track record of taking businesses and giving them big hearts. We have got almost 12,000 people here who have got to be led through change. Tom is the kind of character who can do that – I guarantee it.”
It seems that FT might finally be ready to give its subsidiaries more control over their own destinies and in Alexander it has appointed a marketing heavyweight with a proven track record in the UK telecoms industry.
But he must work hard to rediscover the ethos of the company if the future is once again going to be bright for Orange in the UK.