Vonage to Weed out High Cost Acquisition Efforts

The CEO of big online ad spender Vonage, Michael Snyder, has resigned. I listened in on this morning’s investor call, during which recent legal wranglings and financials were discussed. The company was pretty vague about future marketing and advertising plans, but I jotted down a few interesting things along those lines.

“Our marketing spend is highly variable,” said Jeffrey Citron, Vonage chairman and interim CEO.

Essentially, the company plans to analyze its current efforts and weed out the stuff that’s resulting in exorbitant costs per acquisition. “In the short run,” said Citron, the company will isolate programs from all channels bringing in “marginal customers…meaning customers coming in at a very expensive rate.” Those programs, it’s assumed, will be on the chopping block.

“[Vonage] is looking at revamping its marketing campaign. I think the initial work the company has done over the last three or four months has shown positive improvement in the cost to acquire customers,” he continued. “That number’s come down almost ten percent.” Incidentally, Vonage’s online ad spending has dwindled in recent months. Check out ClickZ’s recent coverage of how Vonage’s legal woes could affect its online ad plans, and the networks it buys through.

Vonage expects to appeal if the court doesn’t grant it a stay allowing it to continue marketing the services Verizon alleges infringe on its patents. The impression I got is no drastic changes will be made to Vonage’s marketing plans right away; but changes are to be expected down the road.

UPDATE: According to a company press release, “Vonage announced plans to reduce its marketing expense by approximately $110 million. As a result, the Company expects marketing expenditures of roughly $310 million for 2007.”

Will that mean less TV ad yodeling? Less online ad network buys? It’s unclear at this point.

Another data point from Computer Business Review Online: “Vonage’s marketing spend has been closely watched. It was a whopping 47% of revenue in the first quarter this year, the company revealed yesterday, down from 53% in the fourth quarter.”