Try, try, try again: will ad-funded mobile ever work?


Say hello to Samba, a new service that launched in Britain this week that wants to give its customers access to fast mobile broadband for free.

Free? Yes, free.

The proposition is enticing: once users have bought an inexpensive Samba SIM card and perhaps a dongle too, they can get their 3G data for nothing.

How it does this is pretty straightforward. Samba’s an MVNO that runs on the 3 (s HWL) network and is aimed largely at laptop and tablet users on the go. The twist is that it’s ad-funded, so while users don’t pay with their wallets, they pay with their attention. Watch two and a half minutes of adverts in a day — from brands like Volvo, Microsoft (s MSFT) and Dell (s DELL) — and you’ve worked up enough credit to cover more than 500MB of data.

“With Samba you earn the credit watching ads at a time that is convenient to you and then have access when you need it,” co-founder Ben Atherton told the BBC. “It also marks an end to that hunt for a coffee shop, pub, hotel or library to get online.”

Sounds interesting, and — like Free Mobile in France — another example of attempts by European companies to alter or disrupt the existing operator model.

There’s a fly in the ointment, though: yes, MVNOs are having a resurgent moment, but the world of ad-supported mobile isn’t a wide open plain: it’s a graveyard stuffed with the corpses of companies that thought they could do the same and failed.

Blyk days

The biggest example of prior art here is probably Blyk, an ad-funded MVNO which launched in the U.K. in 2007 to great fanfare. The idea was similar to Samba, but it was focused on a different segment of the market: young people who were heavy talk and text users and didn’t mind seeing ads in order to rack up free airtime.

The company (which still operates out of Finland) had strong credentials: it was run by former Nokia (s NOK) president Pekka Ala-Pietilä and advertising guru Antti Öhrling, and staff included Marko Ahtisaari, who is now Nokia’s head of design.

It brought in a swath of high-profile advertisers and got a ton of press, and it made a big push: I remember seeing an army of Blyk street marketers trying to get people interested in the product in my hometown, which has a big student population. After six months or so, the company claimed 100,000 users.

But in the end it struggled. The U.K. operation closed down in 2009, and now, instead of being a consumer-facing brand, it focuses on advertising technology and partnership with European networks like T-Mobile (s DTE) and Orange (s FTE) and India’s Aircel.

The conclusion? Ad-supported mobile services are a tough, tough business.

Ads can work — for a lucky few

There are plenty of other businesses that exist through ad support, of course.

Some are bigger money spinners than others (TV versus news websites, for example), but most of them aren’t purely ad supported at all: advertising is just one part of a complex revenue mix. And when you’re talking about online services, ad supported media can be really tough — music services like Spotify have found it a difficult thing to pull off, while in video, the vast difference in revenues between a subscription service like Netflix (NFLX) and an ad-supported one is a big reason reason Reed Hastings has rejected buying Hulu in the past.

Advertising platforms, on the other hand, can be extremely powerful: think Google (s GOOG) or Facebook (s FB). These are appealing to advertisers because they are self-service, highly-segmented, and targeted. They make money because they scale easily, they don’t necessarily require huge sales teams and they aren’t broadcast mechanisms.

In an online world where the value of advertising is decreasing all the time, Samba not only needs to convince users that it’s convenient to watch ads in exchange for data — it needs to know whether it’s actually an ad platform or simply a channel disguised as a platform.

Photograph copyright Shutterstock/Ganko


rohit bagad

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