Advertising funded mobile calls work - just ask Blyk

Stuart Corner
Friday, 19 September 2008 06:52

Opinion and Analysis

Blyk, the world's first mobile operator funded solely through advertising, revealed to analysts last week that it had doubled the number of customers since April, to 200,000. This is very significant development for every player in the mobile industry.

Blyk was launched in the UK in September 2007 offering customers free text messages and call minutes in return for accepting up to six advertising messages per day.

Members get 217 SMS text messages and 43 call minutes a month and the service is targeted primarily at 16-24 year olds (It won't accept you as a customer if you don't fit this age bracket).

CEO Pekka Ala-Pietila told analysts and journalists, according to Reuters, that Blyk had achieved the highest response rates for the lowest cost of any advertising medium: 25 percent of those who receive ads respond to them costing advertisers 50 pence ($US0.89) per response.

In the wake of Blyk's debut in April 2007, I suggested that the concept deserved to be taken very seriously, saying: "Mobile users become particularly attractive to advertisers because advertisers can build a direct one to one link with each customer or potential customer. The corollary of this is that the mobile user becomes more receptive to the advertising message because it relates to a product or service in which they have an expressed interest."

Now, according to Reuters, Blyk's operations are closely being watched by traditional mobile carriers struggling to find replacements for dwindling voice call revenues.

Just how seriously mainstream operators are taking the concept can perhaps be judged from the comments made by Vodafone Australia when it launched advertising-funded mobile content in February 2008, saying that: "in three to five years, mobile content and possibly even mobile calls will be heavily subsidised by advertisers." Then, the number of Blyk customers was put, unofficially, at just 30,000.

Australia got its first advertising-subsidised phone service in August 2008 from ComTel (ASX: CMO); unashamedly modelled on the Blyk service. ComTel cited at the time Blyk performance stats not far from those the company reported last week: average cost to advertisers per response was 53p, compared to averages for online of £1.50, email of £2.00, unprofiled mobile SMS £2.22 and direct mail, £12.50.

ComTel's service is provided on the Vodafone Network. Users pay $10 per month instead of the normal $29 for a plan offering $130 per month worth of calls and SMS at standard charges in return for agreeing to receive up to five advertising SMS/ MMS or email advertising messages per day, with the advertisers picking up the balance.

There is no fixed contract requirement: users can port in their existing mobile number and can opt out of receiving ads at any time and continue on the same plan by paying $29 per month.

It's early days yet for the service and ComTel has given no indication on its performance. When he announced the company's results at the end of August, chairman Kevin Weldon said: "In the coming year we expect to consolidate our early mover position and grow our base of mobile and online advertising solutions that reward customers whilst delivering measurable an instant results for advertisers.

Watch this space, and Blyk. This market is still in its infancy.