MVNO Blyk succeeds in providing free mobile phone service
I’ve written a lot about Blyk, a mobile virtual network operator based in the UK, that has a novel business model: giving away free mobile phone service in exchange for users’ viewing MMS and SMS ads. While this “free service in exchange for ads” model has not worked well in the citywide Wi-Fi space and has never been tried in the cellular industry, Blyk claims they are doing very well. The reason: they target 16-24 year olds. Unless you fall in that age group, you cannot get Blyk’s service.
How successful is Blyk? They’ve already signed up 100,000 people since September 2007. Compare that to Helio’s 170,000 subscribers (and Helio has been around since October 2005) . Blyk members get a certain number of free text messages and calling minutes every month. Blyk claims they have save their members over £2801 each year. Best of all: no contract, no hidden costs or fees. It’s also simple to get started. You order Blyk service online, they send you a SIM card, you pop it into your phone.
Shaun Gregory, UK CEO says: “Young people have embraced Blyk because it makes phone bills and contracts a thing of the past. That’s right, we all hate contracts, cancellation fees and funny hidden charges. But young people despise it most of all and don’t see why they should put up with it.
Here’s the catch. Blyk members must agree to receive up to six advertising messages per day from brands such as L’Oreal and Adidas. According to Blyk, “the ad campaigns that fund the service have generated industry leading average response rates of 29%, at a time when trust in other forms of mass advertising is falling and brands are finding it increasingly difficult to engage with young people.”
Blyk: more of a media platform, less mobile phone operator
The less obvious reason for Blyk’s success (one that most of the telecom analysts and commentators have missed because they’re so focused on the old-fashioned cellular industry) is that Blyk is not just a mobile operator. It is an advertising / media platform. Better yet, its management team and board of directors consist of people who have years of experience in the advertising industry and connections to large companies that have millions of dollars in advertising money. These people are not plain vanilla telco heads or ISP types.
So it’s no surprise that they created Blyk Media, a service that allows advertisers to create and book advertising campaigns on the Blyk network.
Here’s what the Blyk Media site says:
As a youth medium, Blyk offers your brand:
- Over 100,000 UK 16-24s fully opted-in to receive communications on their mobile phone
- 29% average response rate on campaigns
- £0.53 average price per response
- Insightful reporting
- Ability to remarket
You can read the case studies of Blyk’s advertisers (Boots, L’Oreal, Brylcreem, etc.) on the Blyk site.
In summary, an MVNO will find the market a punishing place if all it does is shove bits (voice, data) to and from the user. It becomes a commodity service. This is where many operators are headed, MVNO and incumbent. By creating an advertising platform and limiting it service to a particular group of users, Blyk is going into unexplored territory, but is also trying not to fall into the commodity telecom services hole.
Expanding to the Netherlands
Until recently, Blyk has been extremely secretive about where they will be expanding. So we know now: the next country on their list is the Netherlands in 2008; Germany, Spain and Belgium in 2009.
>>Poll Question: Do you think an MVNO like Blyk will succeed in the United States?
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Related stories:
Blyk signs up 100,000 customers, six months ahead of schedule
Free mobile calls with advertising: Blyk’s response rate 29 percent
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