The idea of offering free telephone service in exchange for listening to ads has been around since before the internet, before cell phones in fact, and back when phone service was pretty expensive.
It never really caught on.
It may now, all these years later.
A mobile phone company in Britain, Blyk, launched this past September with an interesting offer aimed at 16- to 24-year-olds: free, ad-supported mobile phone service.
Media people have kept a close eye on it, curious whether the economics of such a plan are viable. “Everyone in the mobile industry is watching the performance of Blyk,” says Jan Michael Hess, CEO of Mobile Economy, a small management consultancy in Germany.
Early signs suggest Blyk is on to something. Its aim was to get 100,000 users by this coming September, and it says it’s on target to do that.
It also claims an incredibly high response rate to its ads. It says it has run 500 ad campaigns and has achieved an average response rate of 29 percent.
Now Blyk is in an expansion mode. With fresh financing from Goldman Sachs and others, the company plans to roll out its service in the Netherlands later this year. Blyk’s CEO, Pekka Ala-Pietila, is a former president of Nokia.
What’s unique about Blyk, notes Steven Hartley, senior analyst at research firm Ovum, is that it’s “a media company offering a profiled audience to advertisers, rather than a telco touting its subscriber base for sale.”
Yet Blyk faces considerable challenges, notes Hartley. “It is still a very niche offering, and without sufficient scale it could become increasingly exposed to changing market conditions,” he says. Others can copy the model or come up with attractive variations. Already in the U.S., some phone services are offering free minutes to subscribers who commit to listening to ads.
Here’s how Blyk works: The service is available only to 16- to 24-year-olds. They sign up for 43 minutes and 217 text messages free each month. In exchange they receive six text or multimedia ad messages a week on their phones.
Most who sign up are students, says Jonathan MacDonald, Blyk’s sales director. And while that suggests most of them are cash-strapped, he says it’s rather a case of their wanting to spend what cash they have going out, catching movies and buying music and gadgets. And that makes them ideal targets for marketers who sell such products and services.
Advertisers target that audience based on data from the profiles the users fill out, as well as data on what type of ads they’ve responded to previously. So far, 60 advertisers have signed on, among them L’Oreal, Buena Vista, Swatch, Dominos Pizza and Coca-Cola.
Advertisers pay around 14 cents to send a text message and 44 cents for a multimedia message.
Because advertisers are communicating with people on such a personal medium, relevancy is key. Ads might include the opportunity to see a movie trailer before it is widely released, a voucher for a beauty product, or the chance to vote on which new design of a product they like best.
The response rate has been higher for basic text messages, 41 percent, versus 22 percent for multimedia messages, which can include things like videos and music tracks. But in any case, both are well ahead of response rates for online or direct mail pitches.
