Watch ads to cut phone bills

Bloomberg

An Australian startup is getting some traction with a proposition for mobile-phone users: Watch our ads, and we’ll cut your wireless bill.
Called Unlockd, the company has reached half a million customers through deals this year with two carriers to offer users a discount on their rates if they agree to view ads when they unlock their handset screen. In the US, Boost Mobile, a brand of Sprint Corp., gives customers with Android phones a $5 credit on prepaid plans that cost from $30 to $60 a month.
Unlockd also operates in the UK through a deal with Tesco Mobile, and plans to expand into five more countries by October, and an additional eight before year-end. It’s raised more than $20 million from investors including two heavyweights: Sol Trujillo, former chief executive officer of Melbourne-based phone company Telstra Corp., and Lachlan Murdoch, co-chairman of 21st Century Fox Inc. It’s seeking to raise as much as $40 million more this year, said Matt Berriman, the startup’s CEO.
“Consumers have been looking for ways to get what they want, sellers have been looking for ways to reach consumers, all enabled by wireless and bandwidth,” Trujillo said in an interview. “The carriers have been looking for new revenue streams. There’s a great triangle here where they can generate new revenue off of services their customers chose to take or not.”

HEATED MARKET
Unlockd joins a growing list of companies — including Facebook Inc., Amazon.com Inc. and Pandora Media Inc. — that are targeting the mobile-advertising market, which is expected to more than double to $65.5 billion by 2019, according to researcher eMarketer. The moves come after years of attempts by startups and companies like Virgin Mobile to offer ad-subsidized wireless service, many of which were aborted. Proponents say those companies were ahead of their time, and that consumers are now more receptive to viewing ads on their phones.
Unlockd is working with more than 300 advertisers globally, including Starbucks Corp., McDonald’s Corp., Viacom Inc.’s MTV, Lyft Inc. and News Corp., he said. “Like any good mobile product, it’s more about timing, and I think the timing is very good,” said Doug Robinson, CEO of Fresh Digital Group. His agency’s clients include Macy’s Inc., Walt Disney Co.’s ESPN and Ford Motor Co. Earlier this year it used Unlockd to run a public-service campaign for the Partnership for Drug-Free Kids. “To pinpoint this audience on TV or radio is nearly impossible,” Robinson said. “We know exactly who we are reaching.” In the U.S., Unlockd users tend to be younger and Hispanic, while in the U.K., the program reaches people 25 to 54 years old, Berriman said. Unlockd isn’t available on Apple Inc.’s iPhones.

FRONT DOOR
When consumers sign up for the service, they get ads, content and promotional offers whenever they swipe the screen to unlock their handset, and those ads are tailored to their location. A Boost customer would typically use the Boost Dealz app to see 25 to 30 pieces of content or ads a day in return for the lower bill, Berriman said. An ad can be dismissed almost instantaneously. “People used to deliver newspapers onto the front doors of people’s homes, because it was the first place in the morning people would go,” Berriman said. “What we are seeing now is people don’t go to the door now first thing in the morning. They roll over and look on their phone.”
Unlockd licenses its platform to telecom companies and shares the advertising revenue with them.
Berriman declined to discuss particulars of its deals. A decade ago, Virgin tried offering users free minutes for watching ads; the Sugar Mama program was shuttered in 2009 amid the financial crisis. The Finnish company Blyk tried its own ad-supported wireless service in the U.K. but had to change its business model around the same time. The common wisdom came to be that ad-subsidized wireless just doesn’t work.
Other companies challenging that notion today include RingPlus Inc., which launched its ad-supported service last year. It offers free and discounted plans, but asks users to listen to a commercial before an outgoing call is connected. Chicago-based CellNuvo lets users earn minutes and texts by answering surveys and receiving ads.

LOCK SCREENS
The fact that Unlockd acts as a carrier’s partner instead of a competitor could help it succeed, according to analysts. “This can work provided the discount levels are right, the ad experiences are good,” said Paul Verna, a senior analyst at researcher eMarketer. “This is basically putting money back into consumers’ hands without asking for a lot in return.”
The unlocked and locked screens are a relatively new target for mobile ads. In July, Amazon began offering Prime members $50 off the price of phones from brands Blu and Motorola in return for viewing ads on their locked screens. Startup Mobile Posse serves content to a user’s home and lock screens.