SMS is the new black

A review of mass market mobile apps

Blyk grows and shrinks

Posted by Admin on November 19, 2008

It’s been reported today that Blyk – everyone’s favourite ad-funded mobile network – has raised money for expansion and announced that it will have to make some cutbacks.

While I understand the business logic of that, I would be pretty agrieved if I was one of the cutbacks being made, especially as they have just raised €40m.

Pekka Ala-Pietila, Blyk’s CEO and co-founder, said this of the extra funding, “the advertising industry and operators have expressed a strong interest in bringing Blyk into new countries and Eur40m in additional funding demonstrates the commitment by investors to the Blyk media model.”

While he had this to say about the potential cost cutting, “however, we like everyone else are feeling the impact of the world’s financial situation. As a result, in parallel to securing the new investment, we’ve taken decisive steps to cut costs and streamline our organization.”

To my mind it shows that the Blyk model is of interest and and can be replicated globally, but it’s not quite as good as they originally predicted and needs to be carefully managed. I’m still unsure about the arbitrary numbers of minutes and texts you are allowed. I’m also unsure about how many of Blyk’s subscribers use it for their primary device and how many just have it as a free top-up service for their minutes.

The other issue of course with Blyk is the balancing act of pushing for subscriber numbers to appeal to advertisers and not having too many subscribers as each one is expensive. The figures I heard recently are that Blyk has about 5% of the market of 16-24 year olds. Not bad, but if I was an advertiser I want Blyk to have 10% to make it worth my while.

What those numbers do highlight of course, is that even if Blyk has 10%, then the other five major UK operators must have about 15% each (quick calculations, 5 x 15 = 75%; 10% for Blyk; 15% not subscribed or with other operators). Why aren’t they offering more stuff through an ad-funded model?

It doesn’t have to be minutes, but it could be new services or applications that customers want, but don’t want to pay a premium for. Jonathan MacDonald (ex of Blyk and now of Ogilvy) was talking at the Future of Mobile event about making ads so relevant they feel like content. I would suggest that the future of ad-funded is to go one step further and allow real valuable content, through an ad-funded model.

It’s a question of whether we want to go down the internet route of advertising – annoying, intrusive and low response rates; or the commercial tv route – I accept the ads because i know they pay for the content I want.

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