The News

Ad-funded mobile firm to enter 3 European markets

25/06/2008

Wed Jun 25, 2008 1:51am EDT
By Tarmo Virki

HELSINKI (Reuters) - The world's first advertising-funded mobile telecoms operator, Blyk, will enter the highly competitive German, Spanish and Belgian markets next year, the firm said on Wednesday.

After a slow start, wireless companies are making moves into the potentially lucrative mobile ad market, helped by new technologies and the spread of more advanced phones.
Finnish-British Blyk is a mobile phone service that offers a number of free calls and text messages to 16 to 24 year olds in return for users accepting advertisements.
Closely-held Blyk opened the service last year in Britain and a launch in Netherlands is scheduled for later this year.

Germany and Spain are among Europe's biggest ad markets and Belgium's ad spending per capita is among the region's highest, Blyk's co-founder and chairman, Pekka Ala-Pietila, told Reuters.
The top German mobile operators -- Deutsche Telekom's (DTEGn.DE: Quote, Profile, Research, Stock Buzz) T-Mobile, Vodafone Group Plc (VOD.L: Quote, Profile, Research, Stock Buzz), KPN's (KPN.AS: Quote, Profile, Research, Stock Buzz) E-Plus and Telefonica's (TEF.MC: Quote, Profile, Research, Stock Buzz) O2 -- are competing hard on price, driven by E-Plus, which owns a host of budget brands.
The situation is similar in Spain, where Telefonica, Vodafone and France Telecom's (FTE.PA: Quote, Profile, Research, Stock Buzz) Orange, along with a dozen virtual operators, battle each month for 350,000 people hopping from one operator to another.
Ala-Pietila, a former president of leading cell phone maker Nokia (NOK1V.HE: Quote, Profile, Research, Stock Buzz), said the firm was in advanced talks with operators over network renting in the new markets.
"These talks are in quite a late stage," he said.

In Britain, Blyk has signed up more than 100,000 youngsters offering 217 texts and 43 minutes of voice calls per month for receiving up to six texts a day from brands including Adidas (ADSG.DE: Quote, Profile, Research, Stock Buzz), L'Oreal (OREP.PA: Quote, Profile, Research, Stock Buzz) and Manchester United.
Ala-Pietila said it would be similar in Spain, Germany and Belgium. "The offer is seen as very attractive and as a proof we reached 100,000 clients six months ahead of our plans."
Blyk said the ad campaigns had generated average response rates of 29 percent, compared with the usual response rates in advertising of just a few percentage points. The campaigns are built on messages, and aim to engage users in dialogue.
"For 16 to 24 year olds, communication is strongly focused on instant messaging and texting, and that works extremely well as an advertising channel," Ala-Pietila said.
According to various studies, mobile ads will generate revenue of anywhere between $1 billion and $24 billion within four years. Advertisers are drawn to the sheer scale of the potential audience: 3 billion people worldwide use handsets.
Blyk plans to open in more European countries later.
"The concept can be adjusted to several markets," Ala-Pietila said. "Our target is not to stop at five."

(Additional reporting by Robert Hetz in Madrid and Georgina Prodhan in Frankfurt; Editing by Braden Reddall)