Can Blyk Rewrite the Rules for Mobile: New Ad-Supported Carrier Model an Interesting Experiment

location based services

Blyk is quite possibly the biggest gamble in wireless history. The concept, to offer free mobile phone service to a youthful demographic in exchange for the right to pipe advertising directly to the handsets of the users of the network. In development since January of this year, the company plans to launch its inaugural service in mid-2007, staring in the UK and ranging out from there.
The company describes itself as: a pan-European free mobile operator for young people, funded by advertising - Richard Lusk, the CEO of Foldera* - who recently met up with Blyk Co-Founders Pekka Ala-Pietilä and Antti Öhrling at the 2006 World Technology Awards describes the service as brilliant.
According to Lusk (who is no stranger to being the maverick technologist going against the grain and doing things his own way) “Blyk is brilliant on many levels - they’re plugging right into the heart of the “MySpace Generation” via the most important and personal device they own. People who say this won’t work clearly don’t get it; kids have made it abundantly clear that they’re willing to trade attention for products or services and nothing is as liberating for a young person as to be unfettered from the constraints of a phone bill paid by a parent or restricted due to cost.”
“I can see this taking off far faster then many people expect,” Lusk continues “Google has clearly shown that so long as the advertising is relevant and unobtrusive it is relatively simple to provide high value services and subsidize them with advertising. Having the additional information of physical context in addition to everything else you can infer about someone by virtue of the way in which they use their handset is far more exacting then supplying advertising based upon simple searches. If Google AdWords works so well driven simply by search behavior than Blyk ought to be significantly more effective with all the data a mobile provides a possible marketer.”
That’s some fairly strong conviction for a model that’s never been tried, but bear in mind that Lusk is the founder of Foldera, a web-based organization and collaboration application that will derive a portion of its projected revenues from contextual advertising when it launches in 2007 and he’s been thinking through this model since 2002.
From my perspective I think it bears significant weight that the CEO and Co-Founder Pekka is a former President of Nokia and that they management team is a virtual who’s who of mobile telephone entrepreneurs. Further, the company is advised by marketing guru Don Peppers of Peppers and Rogers, a world renowned expert in marketing and customer driven businesses.
A lot of whether this works or not will come down to three things; can they get the right mix of advertisers to excite the demographic they’re serving? Sell them stuff they’re into and they’ll buy it, can they find the right mix of ads to service? (enough ads to make the company money, but not so many that it irritates the users, and (assuming they get traction) can the company carve out enough of a market lead that a fast follower like a MySpace doesn’t take advantage of it vast network of current users by rolling out a competing service.
While it seems that there are plenty of questions that still need to be answered I wouldn’t bet against Blyk anymore than I would against Richard Lusk or that little phone company up in Finland.
*DISCLOSURE: I am the Senior Vice President of Business Development, Chief Mobility Officer and one of the Corporate Bloggers for Foldera.
Tags: mobile marketing, susidized mobile, free mobile service, oliverstarr, mobilecrunch Categories: Announcements, Analysis, Mobile Advertising, blyk Bookmark this post with del.icio.us
2 Comments
It all depends on how relevant those ads are. If those phones had a GPS unit I bet we could make them a whole lot more relevant (the ads :)
Comment by Peter Cranstone — November 21, 2006 @ 10:18 am
1. The service restrictions for such a ‘free’ service will have to be huge. How can advertising support calls for customers that make calls both national and international from their mobile.2. Will this company organise free roaming as part of the service.3. My guess is that the business model must be linked to the usage/bandwidth consumed, therefore the users making more calls than others possibly suffer from having to digest more advertising.4. Unless the customers of this service have to give very detailed information concerning their demographics/preferences, there is no way that they will receive targeted advertising.5. The mobile is not TV, it never will be, shoving advertising down the mobile pipe on the off chance that the number of recipients will be sufficient to attract the clients [advertisers] is fraught with risk - very high risk.6. MVNO’s have cost of aquisition, is this company going to use decent methods to attract customers for free. We can do it on the web, we have viral marketing and social community tools to attract customers. If Blyk is going to suceed it will need to have zero [next to zero acquisition cost]. It does not have brand [like Virgin] and will need to make a marketing impact with its name = cost for acquisition.7. My presumption is that the target demographic is the pay as you go mobile user, this must restrict the value of the advertising8. Can others please add to this list from point 9 onwards, I do not wish to be overly pessimistic about this, but I would like to understand the business case definition and how sustainable it is. It requires customers to sign up to the service and I wonder if any pre launch trials/surveys/etc have been entered into prior to the PR noise being made.
Comment by paul — November 21, 2006 @ 11:19 am
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