Stuart Corner
Wednesday, 02 January 2008 05:47
Opinion and Analysis
Page 2 of 3
Fluc presently operates independent of any cellular network and this is a major disadvantage on several counts: it does not have direct access to customers; it does not have direct and immediate access to location information essential for geographically targeted ads; and no matter how attractive hard cash might be to customers, Fluc will be unable to match the perceived value of free or discounted calls that operators could offer to sweeten the imposition of advertising.
But perhaps most importantly some Fluc users will end up paying to receive some ads: through data charges levied by their mobile operator. For any user that exceeds the monthly download quota of their plan, this could be quite substantial. And woe betide anyone who roams overseas and fails to disable receipt of ads.
One thing Fluc is doing to get around the difficulty of finding customers is to offer every customer an ongoing percentage of the fees paid to new cellphone users recruited as a result of their referrals. This has lead to the organisation being accused of 'pyramid selling'. This is not the case, in pyramid selling the person at the top of the pyramid receives commissions for all direct and indirect referrals, ad infinitum.
Mobile advertising is tipped for significant growth, so despite shortcomings in its business mode, if Fluc can build a decent-sized customer base it could turn a good profit by selling this. Longer term the operators are certain to play a significant and probably a lead role in mobile advertising, but are presently adopting a cautious approach. As they ramp up their involvement pioneers like Fluc are likely to become attractive acquisition targets.
In the US, according to a recent Associated Press report, research firm eMarketer has estimated US spending in mobile ads at about $US900 million in 2007 and growing more than fivefold to nearly $US4.8 billion in 2011. Two industry trade groups - CTIA and the Mobile Marketing Association - have committees developing guidelines, including how to properly get a customer's permission and periodically remind them of any tracking," AP reported.
The AP article said also that "companies are developing ways to share profiles with marketers while stripping out sensitive information such as names." And they are being careful to retain a degree of control over advertising. "On Sprint phones, all targeting to such attributes as age and ZIP code is done on Sprint Nextel Corp's end; advertisers give Sprint the ads for the company to place without having to share any data with anyone...Meanwhile, an ad-delivery system from Ad Infuse can be installed entirely on a carrier's own premises so that data remain under the carrier's control."
