Vodafone, Yahoo: Mobile Ads in the UK

We said yesterday it would likely take several years for mobile advertising to grow big enough to cause a major shift in the mobile industry — or in Google CEO Eric Schmidt’s terms, lead to free cell phones. Today Yahoo and Vodafone announced a mobile advertising deal, indicating that they would like it to be a lot sooner than that. Vodafone wants more sources for revenues, and it also posted a net loss for the first half of 2006.

Yahoo and Vodafone plan to start the mobile ad service in the first half of next year, though, we still think substantial revenues from mobile ads is likely years away. What actual savings customers get out of this agreement is hard to figure out from the press release, and we are waiting to hear back from Vodafone with more details:

“customers who agree to accept carefully targeted display advertisements can expect to enjoy savings on certain Vodafone services. This proposition could extend to key Vodafone mobile assets including the Vodafone live! portal, games, television and picture messaging services.”

It’s pretty telling that Vodafone is working with Yahoo for this specific deal, and not Google. Google hasn’t always been willing to play nice with carriers, though has started to make more deals recently. Schmidt’s recent suggestion that cell phones should be free with ads shows how Google’s dominant brand name could be more threatening than beneficial to some wireless carriers. It will be interesting to see which carriers do deals with Google vs Yahoo on which mobile services.

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