Companies looking to monetize surfers on the wireless Web should consider giving stuff away.
That was the consensus of the three speakers featured last week in RCR Wireless News’ first webinar, “Wireless portals: Who owns the mobile Web user?” While content providers and carriers are rushing to cash in on mobile data, the industry should look to the computer-focused Internet to find blueprints for business models in wireless.
“The reality is we’ve only attracted a small percentage of the users that we really can attract; I think the market can be much bigger,” said Veronika Sonsev, senior director in AOL’s wireless group. “I think the model is going to go to a free, advertising-supported model. And as we saw with the Internet, that free, ad-supported model is what’s really going to drive adoption and usage of mobile content and services.”
Indeed, analysts generally agree that sponsored content and services will pave the way for uptake of wireless data. Carriers are already subsidizing their services with advertising messages on WAP and mobile Web sites, and many believe marketing dollars will ultimately drive 3G services including mobile video and audio.
Those free, ad-supported services should be supplemented with premium offerings for users who don’t mind paying a few dollars to avoid advertising messages, M:Metrics’ Seamus McAteer said. But advertising dollars-not subscription fees or download charges-will ultimately support the mobile Internet, he predicted.
“In every medium, revenues for advertising trumped revenues for paid content,” said McAteer, senior analyst for the Seattle-based firm. “The advertising market is trillions of dollars; the paid content market is billions of dollars by comparison.”
That’s not to say that mobile business models will replicate computer-based models, of course. Advertisers have yet to gain any real traction with wireless Web surfers, who account for less than 10 percent of all U.S. mobile subscribers, according to M:Metrics. It may take a while for users to warm to the idea of marketing messages to their mobile phone, which is seen as a more personal device than computers. And while sophisticated mobile marketing campaigns are already being deployed, advertisers will struggle to find ways to attract eyeballs on the smallest screen in entertainment.
“People on the fixed Web got very used to a model where they got things for free,” said Timo Bruns, executive vice president of the mobile business unit for Opera Software ASA. “I do see more limitations in the mobile space simply because the screen is smaller; the real estate is more limited.”
Opera has gained substantial attention in wireless with Opera Mini, a downloadable transcoding technology that formats Internet content for Java-enabled mobile phones. The company has partnered with Google Inc., which provides the default search option for Mini users, and T-Mobile International has tapped the developer to power its “web’n’walk” wireless Internet service for European users.
Such partnerships will be crucial not just for smaller players like Opera but for Tier 1 carriers and Internet behemoths as well, the guests agreed. Opera and Google are natural competitors-each would love to serve as subscribers’ gateway of choice to the mobile Internet-but the collaboration underscores the need for players from different fields to partner in an effort to lure mobile users onto the wireless Web.
“Whoever will be able to provide compelling content, compelling services, will have an upper hand in these new types of services,” Bruns said. “It will be a little bit of a race on who can keep the customer and get new customers.”
And trying to pick a winner in that race is futile, McAteer warned. Carriers, which have powerful weapons in their customer relationships and billing infrastructure, should try to create mobile communities and increase their brand recognition. Content providers and Internet companies should continue to build their portfolios and work with operators to distribute their offerings to users.
“Obviously, the operators are concerned about being disintermediated,” McAteer said. “They should definitely not just give away ownership of the customer experience to Google and Yahoo; they have a role to play…. This idea of owing the customer, it’s kind of an old idea.”
