BLYK & some other mobile ad stats...

Thomas Husson | September 24, 2007, 05:05 PM

So, the details of the launch of the UK ad-funded MVNO are eventually available.

A few interesting points:

- Blyk seems to exclusively target 16/24 years old, with even some age verification methodology. I guess there are various reasons but the main one is that they want an homogeneous audience for their advertisers. According to our own consumer survey data, this is indeed the target group that is most likely to accept ads on its mobile phones and that is most reactive to strong brand names

- consequently the way to get a free SIM card is by invitation only (and more basically via a sms shortcode) so it is a good way to leverage viral marketing effects and to minimize acquisition costs

- the network will target the ads based on a detailed profile customers will fill out on Blyk's website. The maximum ads to be received is 6 per days, mostly via SMS, since messaging is the dominant behaviour today. No need to reinvent the wheel here.

- so, if you bring your own unlocked phone, you will thus get 43 free minutes and 217 free texts

Why 43 and 217 ? Strange figures, isn't it. Probably because you need consumers to pay at some point if you want to be profitable with a full-MVNO model. The extra fee is 10p per text and 15p per minute. Data pricing is at GBP 0.99 per MB...

This is an interesting business model and BLYK does not necessarily needs a massive number of subscribers to be viable, as many well targeted MVNOs. It is mainly going to depend on how their customers are engaged, how relevant the ads are...

Seems much more interesting to me than the current discussion on CPM and CTRs in the mobile industry. Here's a quick calculation I made recently...Let's take the example of a mobile game provider. If you assume that average banner CPM is 20€ (after discounts), CTR is at the very best 20% and transformation rate (those effectively buying a piece of content worth 4-5 euros) is 2% (at best), a mobile content provider will pay 20,000 euros for 1,000,000 pages impressions, 200,000 visitors, 4000 buyers and 16 to 20,000 euros of revenues. Given CTRs and transformation ratio are higher than the average, it seems to me a low ROI (not to say a negative one) for current advertisers (mainly content providers, excluding the Nike and other Coca testing the water), for which execs are complaining (high cost of inventory seem to be a preoccupation according to our recent exec survey)....

So, if you want to discuss the math and mobile advertising in general, please send me an e-mail at thusson at jupiterresearch dot com

Updated: just a quick precision following various feedback I received:

CTRs on banners are obviously not at 20% on average but much much lower (this was just to take a maximum assumption closer to CTRs on mobile search keywords). The exercise was simply to show that even with a high CTR, the ROI is not necessarily there. That being said, the transformation ratio seems to be much higher (up to 20%) when the ad is well targeted. So let's assume that 5% click-through and 20% buy something at 2 euros for a ringtone, that's 10,000 buyers and 20,000 euros. So, yes, there is a case for it, particularly if you promote a subscription model and not a one-off payment. The fact that the inventory is outsold is also linked to the fact that many content providers want the same best eyeballs: a homepage banner or nice banner in the ringtone category. So, would they buy ads if there was no ROI ? I guess not. But what about those who are only following branding purposes and have not really invested in nice landing pages?