Does your brand have the stretch factor?

O2 is stretching its brand into healthcare, education and financial services as it seeks to bring great customer experiences to new sectors, but should your business consider a similar strategy? O2’s marketing team explains to Mark Choueke how they did it


View from the top

Ronan Dunne, CEO, O2 UK

“Customer insight directs everything we do. We have a brand that leads our business. Most have a business that includes a brand.”

Listening to Ronan Dunne eulogise about the roles of the brand and customer within O2’s philosophy and operations, it is difficult to believe that he trained as a “numbers” man and not a marketer.

Dunne joined O2 before its demerger from BT in 2001 in a financial role that typified his career, and prior to becoming CEO, had worked most recently as the chief financial officer at O2 UK. Before he arrived at O2, Dunne, a fellow and former council member of the Institute of Chartered Accountants, held senior financial positions in banking and the corporate sector.

With this background, it might be expected that Dunne would not be open to structuring a company around the customer or putting a marketing team in charge of building the business. But he talks like a classically trained marketer. “We need to go from a functional to an emotional relationship with our customers,” he says.

Dunne says he has always believed in the power of change and transformation to succeed in business. “We’ve always looked to how we define the rules of the industry and changed the game as we go. We are architects of our own destiny.”

He reports to Matthew Key, former O2 CEO, who is now head of Telefonica in Europe. That allows Dunne a certain amount of autonomy as well as the scale leveraged by a company with 260 million customers across 24 countries.

This summer, Dunne travelled to Telefonica markets in Brazil, Argentina and Columbia to see how marketing was being executed but in many ways the UK, Telefonica’s third-largest market, is leading the way.

“The journey of the brand goes on. We have built trust with the customer in the way we deliver brand experiences; they see us as an experiential brand. That means they trust us that if we bring them something else, it will be something with real value,” he enthuses.

“We’ve always looked to how we define the rules of the industry and changed the game as we go. We are architects of our own destiny.” Ronan Dunne

The extent to which Dunne puts marketing at the heart of O2’s philosophy and operations is reflected in the answers he gives to the tougher questions.

When asked about rumours that O2 has placed its entire marketing department in redundancy consultation, Dunne doesn’t flinch. The consultation on a new structure with new positions started in September and will conclude at the end of this month, resulting in a loss of about 10% of the company’s marketing headcount.

“We’re in a fast moving business,” says Dunne. “If you’re customer-led, the changes you make are those that take you along with customers and keep you close to them.

“This is not about cost cutting – yes, the effect it has may change our cost base – but we only want to invest in things that customers value. That sometimes means shifting your cost base from area to area.”


O2 doesn’t use the word “sponsorship” internally, preferring instead the term “interactive partnership”. Ronan Dunne, CEO of O2 UK, claims this reflects the company’s use of its associations with outside events, suppliers, venues or brands to build customer relationships rather than vehicles for exposure.

“Ultimately, marketing is about customer relationships,” says Dunne. “An O2 customer’s relationship could be defined by their mobile contract or by their experience at The O2. We define and are accountable for the experience of our customers when they are on AEG’ premises – the fact that a lot of our customers think that we run The O2 or decide what gigs go on there is a positive for us.”

“It’s about far more than badging a property… Priority ticketing is one of our most successful propositions.”
Shadi Halliwell

Because O2 partnered with AEG from the beginning, the brand worked with AEG’s architects to shape the internal experiences. “We influenced the look, the feel and the design of The O2,” says Shadi Halliwell, head of brand communications. “It’s about far more than badging a property.”

One of the things discussed in early meetings when the opportunity to associate with the venue emerged was that O2 was keen not to just call it “The O2” and be done with it.

“There are lots of naming rights discussions occurring in football at the moment but it has to go further than just naming a venue. We wanted to give access to our customers, which is where priority ticketing comes from. Two years on, priority ticketing is one of our most successful propositions,” says Halliwell.

Shadi Halliwell
Shadi Halliwell

Halliwell describes how the concepts of engagement and relationships have seeped into the 13 Academy music venues that launched under O2 branding in February and will expand next year.

“We haven’t changed the layout of any of the venues, we’re not looking to disrupt or own music, but rather embrace it. The audience we’re talking to here is younger and perhaps a little more grassroots, ‘spit ’n’ grit’ in their love of music. But we have the O2 touches.”

By this, Halliwell is referring to photobooths in each Academy and digital picture frames along the walls of the venue, where the pictures fans have taken will appear during the gig as well as appearing immediately on the O2 Academy Facebook page.

Exclusive artist content, messages from the bands before the gig starts or video footage of them hanging out backstage is sent out to the audience via Bluetooth – 25% of gig goers currently receive this content. “This is what we mean by interactive partnerships,” says Halliwell. “We don’t just put our logo on beermats and walk away.”

How ‘stretchy’ is your brand?

What you need to know before entering new sectors

Offer something different

Ronan Dunne, CEO, O2: “I always ask ‘why will it be different when O2 does it?’ If we can’t explain the essence of why it will change the rules of the game, then we shouldn’t be doing it.”

Know what you want to achieve

Dunne: “We won’t buy a bank, we won’t run a hospital and we won’t try and run a school. We will bring what we can to the customer experience in the financial, healthcare and education spaces and make it different through the way we interact with the suppliers or the environment.”

Listen to customer advice

Sally Cowdry, marketing director, O2 UK: “Customers felt that because we have delivered in our core market we have the right to stretch our brand. But not in any sector we choose – we couldn’t start a car company, for example. We have the right to play in connectivity, in service brands and in entertainment.”

Be coherent

Tim Sefton, customer director, O2 UK: “We’re not doing what Virgin does, we’re not licensing our brand to unrelated businesses. We’re extending our business and strengthening relationships with customers. We’re not diversifying but innovating coherently to add service and value.”

Be prepared to fail

Cowdry: “We’re working in a beta environment when we move into new sectors, co-creating with customers, failing fast and moving on. We’ve adopted a ‘test and learn’ philosophy. You have to be prepared to fail.”

Get the right people involved

Cowdry: “You need people with the passion and energy to keep focusing on what is right for the customer. That’s more important than having pots of money to keep you afloat in case it goes wrong. We launched O2 in 2002 with none of Telefonica’s financial strength, but we had internal people who were passionate about succeeding with this brand.”

Don’t neglect your core business

Dunne: “Our right to bring great new experiences to customers is founded on us being a great communications company. That is what earns us the right to do the other stuff. That will always be the foundation on which our great relationships with our customers is built.”

O2’s marketing in numbers

8.6% – The response from a recent DM campaign executed on behalf of Fitness First by O2 Media, a service whereby mobile customers opt in to receive relevant offers and promotions from third-party advertisers.

64 – The number of teams that recently competed over three days in Newquay at one of O2’s eight regional “Scrum on a Beach” events for rugby fans up and down the UK. Teams register free then meet, train with and play against England rugby stars as part of O2’s England Rugby Union sponsorship.

15 – The number of people working on giffgaff, O2’s latest “people powered” mobile virtual network operator (MVNO), a SIM-only online service that offers monthly bills repaid to customers who help grow the business through new members or key decisions.

700,000 – The number of customers enjoying priority ticketing for live events. Priority members register their music and entertainment tastes online for the chance to claim tickets for gigs 48 hours before they go on general sale.

21 million – The number of O2 mobile customers in the UK, of which 10m are pay-as-you-go.

O2 essential facts

  • O2 has naming rights for The O2 venue in London, as well as identical venues in Berlin, Prague and Dublin, and 13 Academy music venues around the UK (partnerships with AEG and Live Nation).
  • The brand uses priority ticketing to text customers who register the type of music they like on the “blueroom” at, offering tickets 48 hours before general release, plus VIP experiences and content.
  • O2 has sponsored the England Rugby Union team since 1995 and supports both the grassroots and professional game. O2 customers receive priority treatment at Twickenham and can receive a free pie, pint or programme and meet England players when they visit the “blueroom” in the West Car Park.
  • O2 Money offers two pre-paid credit cards in partnership with NatWest. One comes with a bank account and one without. O2 sends a text to the customer every time the card is used to help them keep abreast of spending.
  • O2 Media uses data to offer consumers the chance to opt in to receive relevant offers, promotions and information from third-party advertisers.
  • O2’s freestanding digital device The Joggler is marketed as the replacement for the fridge noticeboard as the organisational hub of the family home. It incorporates a calendar linked to home computer, digital radio, wi-fi and holds the schedule of every family member so it can send alerts of all events to mobile phones.
  • The brand’s home broadband service launched in 2007. O2 customers get financial benefits as an added incentive.
  • O2 also operates giffgaff, a SIM-only phone offering. Customers who attract more people to giffgaff or come up with successful business ideas for the operator are rewarded with free minutes and top up.


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