CEO of Mobile Economy, Jan Michael Hess, writes:
“…When it comes to optimising Ad ARPU, Blyk has set out to leapfrog the competition with a smart strategy…”
Download Jan’s White Paper (PDF)
Many people in our beloved mobile economy are excited about the new startup company called Blyk because it is the first ad-funded MVNO (Mobile Virtual Network Operator) in the world. Blyk launched in the UK on 24 September, 2007, and is targeted at 16 to 24 year-old customers only. Co-founder and CEO of Blyk is Pekka Ala-Pietilä, former President of Nokia Corporation (1999-2005) and Nokia Mobile Phones (1992-1998). Pekka’s supposedly strong contacts with the top management of many MNOs (Mobile Network Operator) will help Blyk close more beneficial Host MNO deals in 2008 and 2009 as Blyk plans to go pan-European.
Ad-funded MVNO with high Ad ARPU paid by advertisers
For the MVNO and MNO, the logic behind mobile advertising is simple: If you cannot raise ARPU (Average Revenue Per User) charging your customers for new value-added services, you better tap into the media budgets of advertisers that want to communicate with your customers. Thus an ad-funded MVNO is a company that finances a considerable share of its ARPU with money from advertisers. As pointed out below, I assume Blyk’s Ad ARPU to be higher than the Premium ARPU which is paid by users.
When it comes to optimising Ad ARPU, Blyk has set out to leapfrog the competition with a smart strategy: Create the first ad-funded MVNO that offers a big, though limited, amount of free voice minutes and text messages that is attractive enough for the target group to churn in. Secondly, let all Blyk customers opt-in by default into receiving advertising messages that are targeted to personal interests. As targeted ads have a higher value, it automatically increases Blyk’s profit margin.This whitepaper is ad-funded by Mobile Economy GmbH, the Berlin-based management consultancy for mobile innovation. Since I am an expert in mobile advertising and MVNOs, I have decided to reengineer Blyk’s business model, share my findings and develop a number of strategy recommendations that might be valuable to Blyk as well as future ad-funded MVNOs and MNOs.
I believe that it is possible to build a profitable ad-funded MVNO. It is also possible for MNOs themselves to introduce ad-funded voice and data tariffs. You don’t necessarily need to build a new MVNO brand like Blyk to maximise Ad ARPU.
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