Even by the bizarrely abstract standards of corporate finance, 拢28bn is a big number, but it is indicative of the problems that the world's biggest mobile network operator now faces. Fortunately for its chief marketing officer, Peter Bamford, Vodafone has so many problems that he and his campaigns are unlikely to come under the spotlight.
For all the millions spent, Vodafone's brand equity continues to disappoint.
In 2005 it was beaten by Virgin Mobile and Orange in JD Power's customer satisfaction survey. It came a distant third to Orange and O2 in terms of top-of-mind awareness. And, in the single most predictive variable of future success, the net promoter score, it again lags significantly behind Virgin Mobile and Orange. The only thing Vodafone does lead the market in is its total promotional spend.
Its recent tactics reveal an array of flashy, expensive initiatives linking the brand variously with David Beckham, Ferrari, the Champions League, Formula One and Manchester United. A big-spending brand such as Vodafone usually engages budget without first engaging brain. Contrast this with the smaller but smarter Virgin Mobile, which continues to grow its market share while spending less than half what Vodafone does to acquire a customer.
Add to that Vodafone's infamous obsession with superficial brand awareness at the expense of deeper, more differentiating brand associations. At Vodafone HQ an electronic counter continually records the global brand exposures being generated on a second-by-second basis. But what does the brand actually stand for? According to its most recent proposition, Vodafone is about making the most of now. In reality, the company has built a brand 1000 miles wide and about an inch deep.
Then there are the enduring distractions of 3G. For years, Vodafone has fixated on the ability to download Premiership goals to a handset, despite the fact that both the technological capability and customer demand remain unproved. I already have a fantastic device for downloading football. It's called a TV. I also have a mobile version I use on Saturday night: it's called the Coach and Horses' TV.
Increasingly threatening competitors are blamed by chief executive Arun Sarin for much of Vodafone's troubles. Aside from smaller, better-run brands, international competitors including Telefonica and TIM also make life more difficult for Vodafone. Then there is China Mobile, which is growing with quiet efficiency in Asia and is probably the real claimant of the title of the world's most valuable mobile operator brand. And internet telephony? Dismissed naively by Sarin six months ago as 'not what customers want' and 'limited to certain segments', brands including Skype are developing mobile handsets and emerging as genuine competitors.
Perhaps most problematic of all is Vodafone's size. There are advantages in having 180m customers in 27 countries, but there is also a crucial trade-off between scale economies and brand focus. Many analysts now believe Vodafone is simply too big and too cumbersome to succeed.
For all the talk of global brands, there are two key caveats to remember.
First, most customers usually prefer national or local brands to bland global offerings. Second, most marketing managers can't build a national brand successfully, let alone a global one.
30 SECONDS ON ... VODAFONE
- Vodafone is the world's biggest mobile company by sales and profits. Operating in 27 countries, it has partner networks in a further 31.
- Its principle markets are the UK, Spain, Italy, Germany and Japan.
- Vodafone was the UK's 17th-biggest advertiser last year, with a total spend of 拢49.4m - 13% up on 2004. It spent 拢10.8m on press, 拢5.6m on radio and 拢18.4m on TV advertising.
- Vodafone launched 3G services in the UK in 2004, three years behind its domestic rivals. Its customer base and profits dropped sharply last year.
- The company acquired the former J-Phone companies in Japan for 拢9bn in 1999. It is considering selling a controlling interest in its Japanese arm to Softbank, which acquired a mobile phone operating licence last year.
- Vodafone Japan is valued at about 拢10bn, but analysts estimate that it would only fetch about 拢6bn in a trade sale.