THE BOARDROOM PLAYERS: HANS SNOOK - Orange’s chief executive admits that advertising has had a significant role to play in the success of the mobile phone group, though he does have some niggles

Hans Snook does not deal in guess work. As the chief executive of the mobile phone group, Orange, with more than 1.5 million customers and a bunch of beady-eyed shareholders to worry about, this is probably just as well.

Hans Snook does not deal in guess work. As the chief executive of

the mobile phone group, Orange, with more than 1.5 million customers and

a bunch of beady-eyed shareholders to worry about, this is probably just

as well.



But when it comes to advertising, in particular the ’prove it’ part,

Snook, like his peers in boardrooms across the country, is forced to

move out of his usual territory of hard facts and figures and into

guessland.



’It is difficult to tell a direct, concrete relationship between

advertising and the business,’ he says. ’That is one of the most

frustrating things about it. Agencies will always tell you how you can

justify it but you can’t directly link it to connections or to

churn.’



And that is from the man who is not short of so-called ’proof’. When

WCRS, Orange’s agency since the mobile phone business launched in 1994,

won an IPA Effectiveness award for its Orange work, part of its

submission claimed that the success of the advertising had added pounds

300 million to the company’s stock market value. Today the business is

capitalised at pounds 7 billion, but at the time that pounds 300 million

was equivalent to about 10 per cent of Orange’s market capitalisation.

No modest claim, then.



’That was an interesting figure ...’ says Snook, leaving the impression

he did not believe it for a moment. He is equally sceptical about

another figure that the brand specialist, Interbrand, came up with when

it looked at the implications of exporting the Orange name to new

overseas markets.



Interbrand concluded the brand is worth pounds 1.8 billion.



’What that means, I don’t know,’ says Snook. ’Advertising has to have an

influence on the business, how much influence, who knows? We all

recognise that brands are tremendously important. Whatever we have spent

on advertising, we haven’t just promoted a product. By any measure,

whatever we have spent, it has given us a tremendous return.’



Snook, however, is lucky. Unlike other company chiefs who sign off

millions of pounds worth of advertising spend each year with a gnawing

doubt that much of it is money down the drain, he cannot be in any doubt

that his advertising worked. Orange gets the highest spontaneous brand

awareness score when compared with the three other players in the

market: Vodafone, Cellnet and One2One.



Within two years of launch it had broken all the rules about the

difficulties of obtaining share of voice in a business where it was the

last of four operators to get off the ground. Research from Millward

Brown showed even then it enjoyed greater spontaneous awareness than

Vodafone and Cellnet.



By 1996 when Hutchison Whampoa and British Aerospace - Orange’s two

shareholders - decided the moment was right to go to the public markets

with an Initial Public Offering, the Orange name was already so strong,

previous thoughts of listing the UK business as Hutchison

Telecommunications UK were cast aside. As Snook says, the brand became

the company.



His assertion that you cannot link advertising spend and business

performance is not for want of trying.



After every campaign, the company uses Millward Brown to examine

awareness and compare that against awareness of advertising from other

mobile and fixed-line phone companies. It also assesses message impact,

then cross references these findings against new connections and

churn.



His conclusion, he says, after years spent working with agencies in the

telecoms industry - and earlier in his career in the hotel and

hospitality business in markets such as Canada, Asia and Australia as

well as the UK - is that good advertising is ’part of the jigsaw’.



’If we hadn’t had a new concept about mobile communications or

introduced per second billing so setting tariffs at a level that forced

others to follow, we would not have made it. But if you have the best

product no-one knows about, you’re not going to be successful

either.’



Success, as ever, has many fathers. Since the Orange brand was devised

and the company launched in 1994, reams have been written about who came

up with the name, who devised ’wirefree future’ and who brought us, ’The

future’s bright, the future’s Orange.’



For the record, here is Snook’s version. And remember, all this was

driven by the company which had already tried plenty of clever marketing

with Rabbit, its point-to-point phone network that bombed in a highly

public fashion.



Snook and his team started with a licence. They knew if all they were to

be was another version of what was already on the market, appealing

essentially to the high-spending business customer and just advertising

product features, they would not make it. ’We had to have a vision of

what mobile was going to feel like ten years from launch. We had to have

a concept and we came up with this idea of the wirefree future. Wirefree

was my term. Once we had that, we had to find a name, a brand, a

marketing hook.’



Wolff Olins came up with ’Orange’, Snook says, and yes, ’Yellow’ was an

option. With the beginnings of a brand under his arm, Snook then called

in WCRS where Robin Wight argued that the advertising should exploit the

idea that Orange was trying to create a new world, a ’wirefree category’

it could be first in, rather than last in an existing market. This

thinking formed the foundation for the memorable launch ads featuring

the baby floating in water.



’The creative people at WCRS interpreted the wirefree future

brilliantly,’ says Snook. ’Being memorable was very important to

us.’



He believes, in general, that an agency’s involvement with its client’s

business, its desire to get under its client’s skin and its readiness to

make the effort to do that, is the key to the creation of ads that work

for the business. Unfortunately for the agency world, it is one of his

biggest criticisms of the industry.



’Most advertising agencies don’t make the effort to understand the

company, the product, the services and what its customers want. They are

the experts, their job is to get me the right customers. They have to

tell me what they need to know. Maybe I don’t know what it is they need

to know, but if they just do it superficially, they won’t find out. If

the agency wants to do your advertising, they have to find the

hook.’



He cites the advertising campaign for Dove soap as a good example. Here

the agency’s research took them to the company’s in-house chemists.

They, in turn, explained how a quarter of the ingredients in each bar

were the same ingredients as in cold cream. The ’discovery’ lead to a

new advertising position.



Another pet hate of Snook’s is what he describes as advertising’s

’slavish adherence to the single-minded proposition’. The time has come,

he says, for the industry to get a new paradigm. ’They got it years ago

from David Ogilvy and have stuck to it ever since. To me the idea that

you cannot get more than one message across in an ad is just about

generating more advertising dollars.’



From here on in, the ability to get more than one message across in its

advertising is likely to become increasingly important to Orange. On 1

January next year, number portability comes in allowing phone users to

keep their phone number even if they change networks.



To date, the hassle of changing numbers has been a disincentive to

switching companies. The 1 January change is likely to see even greater

competition between the four operators to prove they each have the

network, the pricing structure and the services to answer our every

mobile communications need.



More than nine out of ten existing Orange customers say they’d recommend

Orange to friends and, with the lowest churn rate in the industry,

Snook’s company looks well positioned to take advantage of forthcoming

changes.



However, much of the company’s success to date can be put down to its

tariffs: its introduction of per second, rather than per minute billing;

and its various ’talk plans’ that have reduced the cost of calling by

mobile. But clearly, there is a limit to how low the prices can go.



On top of that, other operators, especially Vodafone - which clashed

with Orange in 1996 over alleged false advertising claims, and lost -

have revisited their own branding and marketing, and there is no longer

such a gap between Orange’s approach and the competition.



Would-be Orange agencies beware, mind you. Anyone out there who thinks

they may have the answer to preserving Snook’s marketing advantage going

forward should be aware of his views on mass direct mail campaigns which

he bluntly describes as the ’biggest con the marketing world has put

over on the world in the last 30 years’.



’Lots of agencies tell you how great direct mail is at delivering

results. Then they tell you that you’ll get an average response rate of

between 1 and 1.5 per cent; if you get two you should be ecstatic, and

if it’s two-and-a-half, you should be over the moon! Then they tell you

that in order to make it really effective, you have to have an offer

anyway which surely defeats the whole thing. Think of the millions spent

on direct mail and all the trees that have been cut down - it’s a

crime!’



Despite his criticisms of the industry, Snook is probably an easy chief

executive for an agency to work with. He is already sold on the concept

of marketing and would like to spend more time on it if he was not so

busy running the company. He knows advertising works, even if he does

not know precisely how well it works, and he can even take it when his

own advertising ideas do not make it on to the screen.



’I wanted ’future proof’,’ he says, when asked who came up with the

line, ’The future’s bright, the future’s Orange.’ ’But I didn’t get

it.’



THE SNOOK FILE

1996

Floats Orange on the London stock market

1994

Chief executive, Orange

1993

Joins Hutchison Telecommunications UK

1986

Joins Hutchison Group Hong Kong

Orange annual adspend pounds 20 million through WCRS

Most admired adman Vance Packard for his 1957 book, the Hidden

Persuaders, which argued against the influence of advertising

Favourite ad Orange ’Vietnam’ series

Business guru Ayn Rand, late author-philosopher and author of Atlas

Shrugged and the Fountainhead.



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