Editorial: O2 story illustrates the true power of good ads

How remarkable that O2 should be breathing down Orange's neck in the race for the lion's share of Britain's mobile phone market. And how appropriate its astonishing transformation should be marked with the award of the Grand Prix to its agency, Vallance Carruthers Coleman Priest, at this year's IPA Effectiveness Awards.

Little more than two years ago, O2 was barely on the starting blocks. Orange was the cool brand with success built on a steady flow of mould-breaking advertising. The contrast with O2 could hardly have been more stark. Newly demerged from BT, it was haemorrhaging money. It had no recognisable brand and appeared ripe for takeover.

Today, a revitalised O2 appears to be stealing Orange's clothes. With a market share now almost equal to that of its great rival, O2 has, dare one say it, actually become trendy.

Meanwhile, Orange's momentum has faltered. Its advertising by Mother has been the subject of much unflattering criticism and for lacking the confidence of its launch work. Its churn rate has jumped from 19.9 per cent to 26.1 per cent in the first half of this year and onlookers ask if its owner, France Telecom, is running it on a leash that's too short.

O2, on the other hand, has shown how innovative advertising and a senior client prepared to make some tough calls can pull a brand back from the brink. Under its chief executive, Peter Erskine, O2 took the decision to sell off its poorly performing Dutch business for a fraction of the amount invested in it, while turning round a German operation that was leaking cash and gaining a tiny market share.

At the same time, VCCP's well-executed programme of integrated communications has been successful at building the O2 brand long term while driving short-term sales.

In case histories such as this, it's hard to know where sound business judgment makes way for inspired creative work to deliver the good news.

Here, the two elements seem to have blended perfectly.

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