Free mobile service financed by ads poised for deal with Orange
Saturday, 24 March 2007
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Blyk, a start-up mobile phone company, will offer free voice and text services to consumers who opt to receive advertisements on their handsets this summer, with a deal to use Orange's UK network set to be completed within days.
The service will be aimed at younger mobile phone users who are happy to receive targeted advertisements to reduce their phone bills. It is set to announce a deal with Orange and a series of agreements with advertisers next week ahead of the launch of the service in July.
"Virtual" mobile networks are companies that offer services to consumers by leasing capacity from mobile network operators. The model has worked well for companies like Virgin and Tesco, but other brands, most notably easyMobile, have flopped.
Although Orange has a deal with 3 UK to provide back-up network capacity, a deal with Blyk would be Orange's first fully fledged virtual network deal.
Mobile phone operators including Vodafone and Orange have conducted trials of mobile advertising services in an attempt to offset declining voice prices.
Blyk was founded last year by Pekka Ala-Pietila, who was previously president of the Finnish mobile phone manufacturer Nokia, and his university friend Antti Ohrling. The company is backed by individual private investors and the venture capital company Sofinnova Partners. It plans to launch the service across Europe, with the UK the first market. The company is hoping to ape the success of Skype in the fixed-line market, which also offered free telecoms services to drive adoption of its services.
Blyk's service will be aimed at mobile phone users aged 16 to 24, a group that advertisers have traditionally found it difficult to reach. Blyk is banking on young people agreeing to receive and respond to advertisements to lower their mobile phone bills. Subscribers can choose to respond to advertisements to improve the relevance of the marketing to their tastes.
Blyk has argued that the missing piece in the mobile advertising jigsaw is the benefit to consumers.
Mr Ohrling is quoted on the company's website saying: "Commercial television has been the dominant form of broadcasting. Free. Netscape introduced free internet browsing. Hotmail was the free e-mail. Google organised the internet for free. Napster created free peer-to-peer file- sharing. Skype launched free internet phone calls ... I believe that free is also the future of mobile communications."
The company has yet to reveal the details of how it will offer consumers free services or what form the advertising will take.
The research company M:Metrics has calculated that in the three months to January, some 16 million people received text-based advertising on their phones. While 5 million complained about the unwanted text, around 2 million responded to the text, 35 per cent of whom ended up buying a product.
