Blyk for the British- free cell calls for ads

[RedGlitter]

September 24, 2007

Getting Free Cellphone Calls for Ads

By ERIC PFANNER

LONDON, Sept. 23 — British cellphone users will get their first look Monday at a new mobile service called Blyk, which will offer subscribers some free calls and text messages in return for their agreeing to accept advertising on their phones.

The idea behind Blyk is not new; Virgin Mobile in the United States started a similar service last year. But the introduction of Blyk in one of the most competitive and technologically sophisticated mobile markets means the service will be scrutinized as a test of mobile advertising’s viability.

Compared with the hundreds of billions of dollars that mobile operators generate annually in fees from callers, text-message users and other network users, mobile advertising remains a tiny business. Analysts estimate that it will generate $1 billion to $2 billion in revenue worldwide this year.

Yet activity is heating up, not just on the consumer side with services like Blyk, but also behind the scenes, as network operators, Internet companies, advertising agencies, technology start-ups and even phone manufacturers seek a piece of the action.

Why are so many people trying to get into such a small business?

Analysts say that spending on mobile advertising could surge, with estimates of the market ranging from $5 billion to $11 billion within five years.

Perhaps more important, fees from callers are flat or falling in many markets, so network operators are scrambling for new sources of revenue. Everyone else wants to be there at the inception, in case mobile marketing turns into a bonanza, like online advertising.

“There’s a battle raging between the Web world and the wireless world for control of mobile advertising revenue, said Patrick Parodi, chief marketing officer of Amobee Media Systems, an online advertising specialist. “It’s going to be war.

Representatives of the Web world have been bolstering their positions for a bolder move into mobile advertising. Last week, Google announced a system for sending ads to mobile Web pages, similar to its AdSense online advertising program.

Last month, Yahoo acquired Actionality, a company based in Munich that specializes in inserting ads into mobile games and other content. That deal followed two mobile marketing acquisitions in May, with AOL buying Third Screen Media and Microsoft buying ScreenTonic.

Given the success of the Internet companies, particularly Google, in cashing in on online advertising, “there’s this assumption that they will move in and take control of mobile, said Eden Zoller, an analyst at Ovum, a telecommunications consultancy. “It’s not that simple.

The biggest selling point of online advertising is the ability to show Internet users relevant ads, based on the Web pages they visit or search terms. But in the mobile world, network operators control information on their customers’ habits, and they are unlikely to give it up — not least for privacy reasons.

Network operators have been been working with advertising specialists to develop their mobile marketing capabilities.

Advertising agencies have also joined the rush to acquire mobile advertising specialist firms, now that many of the attractive targets in online advertising have been bought. WPP Group invested in JumpTap last spring; Aegis Group acquired Marvelous Mobile in June, and Publicis Groupe bought Phonevalley this month.

Perhaps the most intriguing entrant in the mobile advertising game is Nokia, the world’s largest manufacturer of cellphones. Last week, Nokia agreed to buy Enpocket, a mobile advertising network based in Boston, building on previously announced mobile advertising and media plans.