Why did Verizon Wireless spend (over) $100 million marketing the Motorola DROID?

Data. Plain and simple.

It has been nearly four months since Verizon Wireless launched the Motorola DROID and some people still don't get it. I still see various jabs on blogs and in the media from time to time, aimed at Verizon Wireless' decision to spend $100 million marketing the Motorola DROID. Really? In my mind, Verizon should have doubled that number.

Verizon Wireless, just like every other major cellular carrier in the U.S., has its sights set squarely on data. Cellular data has big margins and as such, items like netbooks, USB modems, MiFi personal hotspots and smartphones will continue to be a big focus.

In the Motorola DROID, Verizon saw huge potential. Apart from the fact that Motorola came through big time with this early effort to reinvent its mobile business, Verizon was waiting for a sexy Android device that it could use to combat the iPhone juggernaut. Despite the fact that the Android platform is still relatively young and unpolished, it supports a host of functionality that has yet to make its way to the iPhone. Once Verizon had identified the DROID as the first Android device to fit perfectly into its inevitable anti-iPhone push, it hit the ground running with a massive "DROID does" campaign.

But $100 million is a ton of money... Did it pay off?

Let's look at sales.

In the DROID's opening weekend, it sold about 65,000 units nationwide -- this is a relatively firm number provided by a trusted source. By the end of the DROID's first month of availability, sales estimates vary from 525,000 (according to analytics firm Flurry) to 800,000 (according to RBC Capital Markets). Verizon's target was to sell one million units by the end of 2009 and by all accounts, the carrier exceeded that target by a decent margin. But let's be conservative and call it a million.

At one million units sold -- in just the first two months of availability, mind you -- Verizon Wireless will see data revenue of at least $720 million over the two-year lives of those contracts.

Verizon offers two data plan options with the DROID: $29.99 for 5GB of internet access and personal email, or $44.95 for 5GB of corporate email, personal email and internet access. So at minimum, we're looking at $29.99 each month for 24 months, for each of one million devices. Forget about voice revenue, visual voicemail, VZ Navigator, the handset replacement insurance scam and every other area where the carrier takes in money thanks to these DROID handsets, and Verizon's $100 million DROID play already pays off. And remember, we're still just talking about phones sold in the first two months of availability.

In the end, Verizon Wireless spent $100 million advertising the DROID for the same reason any carrier does anything: Money. Sure it was a gamble of sorts, but this time around the gamble is going to pay off big time. The carrier saw an increase of almost 27% in net subscribers additions year-over-year in Q4 2009. Beyond that, profits from the $720 million of data revenue (minimum) set in motion last quarter -- along with the rest of the revenue those million DROID handsets will generate -- make Verizon Wireless' $100 million marketing campaign a home run.

Contact Zach Epstein, Editor-in-Chief of Know your Cell, via email or follow @zacharye on Twitter