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September 28, 2007

In Legal Hot Water, Vonage Online Ad Spend Plummeting

It looks like Vonage, which has been embroiled in a couple patent suits, is on track to spend a heckuva lot less on online ads than the $185 million it spent in '06. Among the biggest online ad spenders last year, Vonage has fallen steadily from that lofty position since January. According to TNS Media Intelligence monthly data reported by ClickZ, Vonage spent about $26.2 million thus far through June, dwindling its spending as the year's gone on.

Vonage was told in April it would be barred from acquiring new customers, as part of a U.S. District Court in Virginia patent suit decision in which Vonage was found guilty of violating Verizon's VoIP patents. At the time the broadband phone firm was granted a temporary stay allowing it to continue to round up new customers.

Now it's back in the news as decisions have been against the firm made this week in the Verizon case, as well as another patent suit brought by Sprint Nextel. To be brief, the earlier Verizon decision was upheld. As for the Sprint situation, Vonage was found to have infringed on six of the telco's patents, and has to pay $69.5 million in damages and patent fees for future use of Sprint's patents. It also has to pay Verizon for use of its patents.

Vonage says it will appeal the Sprint decision, and claims the Verizon decision will have no negative effect on its business.

Sure, the company seems to spend a lot of money on TV ads, but the huge slash in online advertising (through networks, lead gen and affiliate marketing, that sort of thing) is striking. Last June the firm spent $13.6 million online; this June it spent about $2.4 million, according to TNS. In January it spent almost $7 million, and in February over $10 million.

ClickZ Stats shows TNS didn't even list Vonage in the top 50 advertisers by media spend this March, but the firm spent over $22 million on online ads the same month last year.

I'd assume these lawsuits are cutting into the ad budget, whether the firm is reallocating its spend or not.

Posted by Kate Kaye at September 28, 2007 1:03 PM

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