A mobile phone service that offers free calls and texts to users who agree to receive advertisements could send shockwaves through an entire industry, its backers believe, after its early success.
Blyk, which is open only to 16 to 24-year-olds, has amassed tens of thousands of users and has attracted nearly 100 big companies, including adidas, L’Or?al and McDonald’s, to advertise since its launch in September.
The response rate to Blyk’s advertising campaigns, which take the form of text and picture messages, is, it says, 29 per cent.
That is more than double the typical response rate to direct marketing and a figure that independent analysts say is extraordinarily high.
Blyk says that it is creating a new business model in which customers do not expect to pay for their mobile phone calls. The London-based start-up also lays claim to the advertising holy grail: direct access to the increasingly hard-to-reach youth market.
Advertisement
Users of the service must fill in a form detailing specific likes and dislikes. Blyk says that this enables companies to target their advertising in a precise way not possible elsewhere.
Although it is focused on the youth market, proponents say that the model could be used to target other groups, such as older people, via their phones.
Its promise has attracted Goldman Sachs, the Wall Street bank, and Sofinnova Partners, the Paris venture capital firm, as investors.
The mobile advertising market is the subject of increasing hype. Informa Telecoms and Media estimates that it could be worth more than $11billion (£5.6billion) by 2011.
Google, the search engine group, argues that the possibilities of location-based search advertising opened up by the mobile internet are “the recreation of the PC story”, adding: “It is before us — and is very likely to happen in the next year.”
Advertisement
Virgin Mobile in the United States has also launched an advertising-funded service for its young users, entitled Sugar Mama.
However, such services have failed in the past and some analysts, including James Barford, of Enders Analysis, are sceptical.
“Response rates are often high for new formats,” he said, “but as consumers get used to it, they find it easier to ignore.”
Other analysts say that older users might be unwilling to accept endless spam in exchange for a bill reduction.