Advertising can be a tool for municipalities to generate supplemental revenue for their municipal wireless networks or in, some cases, to generate enough revenue to pay for the network or to support the offering of tiered services across the network.
The advertising-based muniwireless model has been promoted by some service providers, particularly MetroFi Inc., although MetroFi has recently gone to a model whereby it also seeks an anchor tenancy commitment from the municipality. In addition to MetroFi, companies such as Google and Microsoft have participated in trials based on advertising-supported networks.
In September 2007, the Yankee Group issued a report sating that advertising should be “part of a well-balanced plan for wireless community networks.” It noted that cities with the population size and demographics of Minneapolis or Boston could realize as much as $7 million annually once the network is fully built out.
In addition to direct return revenue, the Yankee Group report states that the benefits of advertising include its ability to:
- Foster community relations
- Promote tourism
- Build a platform for delivering future services based on content as well as connectivity
- Serve as a marketing vehicle to drive users to a subscription model.
Companies ranging from Microsoft and Dell to Charles Schwab and Land Rover already are already taking advantage of advertising opportunities on municipal wireless networks, according to Kevin McKenzie, CEO of JiWire, a leading mobile broadband advertising network based in San Francisco. JiWire and companies such as 1020 Inc., Anchorfree Inc., Front Porch Inc., LastMile Communications and Nebuad simplify the process for municipalities by providing turnkey tools for advertising and, in the case of JiWire, actually selling ads through their own networks.
McKenzie, writing for the MuniWireless 2007 State of the Market report, points out that Wi-Fi-centric ad networks can target Wi-Fi users on a location basis as well as at any point in the connection process: before connection on the login splash screen, during the authentication process, and throughout the browsing experience. These ad implementations not only offer advertisers cutting-edge marketing opportunities, but give WiFi providers multiple service options – allowing casual users free access in return for viewing ads, while supplying monthly subscribers with ad-free connections.
So how much revenue can service providers and municipalities expect from ad-supported Wi-Fi? McKenzie says programs such as JiWire’s Ads for Access provide municipalities or service providers with a total revenue opportunity of as much as fifty cents per user, per session, for laptop users. The revenue opportunity increases as mobile WiFi devices become widespread, bringing more users and more ad views to networks.
Even a modest number of users per WiFi node could enable service providers and municipalities to recoup their initial rollout and ongoing operational costs, with high-traffic areas such as airports and train stations having the potential for significant profitability. And if ad revenue is combined with even a token connection fee for paid access, the numbers can become even stronger, McKenzie states.
For service providers and municipalities, the biggest advantage of partnering to deliver ad-supported access is the flexibility it provides to offer multiple tiers of service, notes McKenzie. Instead of having to decide on a free or paid model, they can offer free, ad-supported access and paid access. Most importantly, they can run a sustainable business while giving users a choice of connection options.
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