The News

Orange to offer free gifts to students who agree to receive ads on mobiles

27/07/2009

• 16-to-24-year-olds targeted in bid to compete with rivals' offers
• Technology licensed from pioneering advertising company Blyk

Orange is planning to offer students a range of promotions, such as make-up and tickets and possibly free calls and texts, in return for receiving advertising on their mobile phones.
The deal, expected to be announced within days, marks a major change in the quest to harness the potential of mobile advertising, which offers an opportunity for highly targeted marketing.
Students could also be offered free music as Orange attempts to exploit the key 16-to-24-year-old market under a deal with pioneering advertising start-up Blyk.
Blyk, run by a former president of Nokia, the world's largest mobile phone manufacturer, launched its service in the UK two years ago. It offered 16-to-24-year-olds £15 of free credit a month in return for them agreeing to receive adverts and take part in marketing polls. Orange hopes to expand the concept into a range of advertising-backed promotions as it tries to compete with rivals such as O2, which has used its sponsorship of the former millennium dome to offer its mobile customers priority ticketing.

Mobile phone networks have long hoped that advertising will provide them with a new source of revenue. They have already clubbed together with US-based market research firm Comscore to come up with ways of tracking what mobile phone users do when they browse the web in the hope that this data could be used to attract advertisers.
Last month, Microsoft's head of advertising, Scott Howe, said mobile phone advertising could account for 5% of all advertising spending by 2014. That is far more optimistic than many analysts' projections: Juniper Research believes it is more likely to be about 1.5% of total global ad spending.

An Orange spokesperson refused to comment on "rumours surrounding a deal" but added "as the first major company to pioneer mobile advertising, we are always looking at ways to extend our reach and offers for both our advertising partners and our customers".
Orange started testing mobile advertising three years ago and has worked with companies including BMW, Microsoft and Jaguar. It also has its own media house, which works with advertisers on its mobile portal.

Blyk had signed up a host of brands – including McDonald's and Coca-Cola – who wanted to reach the youth market. But having garnered about 200,000 customers, the advertising market took a tumble last year, leaving brands unwilling to experiment with new formats. As a result, the Blyk model became unsustainable and the company stopped signing up new customers earlier this year. Blyk, which refused to comment, is expected to shut down its own-brand UK service later this summer and instead license it to Orange.

Analysts have been sceptical about the potential of mobile advertising because while mobile phone usage is rising, advertising revenues are cyclical, meaning it is hard for a small company to cover the fixed costs of offering a set number of free texts and calls each month.
Using promotions, free minutes and texts as a lure to get users to accept adverts and take part in trials has been tried in other markets, most notably by Virgin Mobile USA with its Sugar Mama service.

However, since giving away over 35 million minutes since it was launched in 2006, Virgin Mobile USA closed Sugar Mama earlier this month. The company blamed "operational issues" for the shutdown but it is also believed to have struggled to attract advertisers willing to take a chance on mobile during the economic downturn.