Blyk Gets Off The Ground (Finally); But Will Time Run Out Before The Scheme Pays Off?
Blyk, the ad-supported “free” mobile service in the U.K., has launched after a long-ramp up period. The MVNO has bet the farm that its target demographic – 16 to 24 year olds – will accept six text-based mobile ads per month delivered to their phones. In return, users are able to send 217 text messages and talk for 43 voice minutes per month for free. Text or talk over that limit and users will have to fork out some cash. Blyk means business and is dead serious about the age limit: users who reach 25 will have to pay.
Stats from the U.K. indicate there are about 4.5 million users who fall into this target demographic and usage pattern. Blyk has high hopes - but is the business model feasible? Emma Mohr-McClune, Principal Analyst, CurrentAnalysis, believes Blyk may well miss the mark. In her view, the model hosts a “fatal flaw.”
Although the Blyk proposition is stylishly conceived, and its management team high-profile and experienced, I worry that the new MVNO will not be allowed enough time in the market to prove its argument. Critically, Blyk is burdened with the necessity of launching a completely unknown brand and attracting a large customer base in a sufficiently short time-scale to convince advertisers to stay the course.
Blyk is starting out with a customer base of zero, and will be unable to offer its advertiser partners high-volume campaigns in the short-to-mid term. Although Blyk’s 40-plus advertiser partner roll call is impressive, its impression-count and click-through volumes will inevitably take time to ramp up. Any delay in reaching its customer acquisition goals will put Blyk in an existentially precarious position, as it will test of the patience of the advertisers who provide the very life-blood of its proposition. In fact, advertisers’ patience has already been tested. Blyk promised to launch in Q1 but an unexplained delay pushed that date to ‘summer’, and this Autumn launch sees the Blyk brand emerge some half-year later than originally anticipated.
How much more advertiser patience can Blyk count on going forward? Right now, big-brand advertisers are just feeling out the opportunity of mobile advertising: this is a market which still has to prove itself. In the print media world, many of the global brands on Blyk’s roll-call would simply refuse to look at a campaign opportunity offering fewer than a million impressions. Anything less is not considered worth an advertiser’s time of day.
Right now, the mobile advertising market holds the promise of putting an advertiser’s brand in front of millions of mobile eyeballs, but at this moment in time Blyk has no customer audience to speak of. Today, Blyk is able to excite advertisers’ imaginations by offering them the opportunity to get in on the ground level of an explosive new mobile advertising market. But how long will Blyk stay on the ground floor? When does it all start to ‘lift off’? How long will advertisers hang around to find out?
Bottom line – if U.K. consumers fail to sign up in satisfyingly large numbers within the first year to 18 months, Blyk’s advertiser partners will probably lose faith and walk away. After all, nobody wants to be associated with a failure, least of all a global brand. Advertisers are, by nature, an unforgiving, number-fixated ‘Show-Me-The-Money’ kind of crowd. If Blyk fails to deliver on volumes, its advertiser partners will vote with their feet. And if this happens, Blyk will lose the key building block that its entire business model relies on.
Advertising partner loss would also negatively impact Blyk end-user satisfaction. The Blyk proposition awards end-users a quota of 217 free SMS and 43 free voice minutes per month, in exchange for consent to push 6 ad messages to the customer’s device per day. Repeat: Six Mobile Ads Per Day. Blyk (correctly) argues that tailoring ads to a mobile user’s gender and interests enhances the perceived ‘value’ of that ad. But if Blyk’s advertising partners lose interest in this project, how much ad variety will Blyk be able to offer its pre-segmented customer base? Will customers still appreciate the ‘value’ of the deal when they receive the same ad four or five times in a row?
The entire industry will be watching closely to find out.
Emma Mohr-McClune is a Principal Analyst at Current Analysis, responsible for coverage of European mobile consumer services. |