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Smell the Coffee:
Opt-in advertising and the payoff

by brad smith
May/June 2001

Dutch Stiphout is a 22-year-old senior graduating from the University of Colorado with a computer science degree. He’s already landed a job building distribution management software. Intelligent and tech-motivated, Stiphout seems as likely as anyone to be tuned into the wireless Internet and its wares.

Don’t bet on it.

There’s a lesson in Stiphout’s participation in a trial of wireless advertising held last year in Boulder, Colo. He signed up to participate for two reasons: curiosity about the wireless Internet and free AT&T Wireless PocketNet service with a phone.
The lesson? Curiosity wanes. What’s left, if anything, is the payoff.

Stiphout agreed to receive six ads each day. Over four months, he acted on the ads perhaps three times. Intrigued by ads offering discounts, he never found time to act on them. The only ads that led to a purchase were those promoting a new movie, which included advance access to tickets via handset.

“I had no idea what they might advertise on a phone,” Stiphout says. “I didn’t expect much and I didn’t get much.”

Still, Stiphout says he might agree to accept ads in the future, but only if there’s a deal up-front, like a discount on his wireless bill.

Twenty-nine-year-old computer programmer Steve Buhr had a similar experience. He participated in the trial because the service was free and offered a drawing for a free vacation.

Buhr set up an online account using his Visa card, charged movie tickets with a handset click, and he and his girlfriend didn’t stand in line.

Like Stiphout, Buhr says he would accept wireless ads if there was some in-the-pocket benefit to him. “If it’s just a buck or two it isn’t worth it, though.”

So, is wireless advertising going to founder as on the wired Web, where sites struggle to survive as advertisers become skeptical?

Sure, we’ve all heard the talk that wireless can’t be compared to wired because it has the advantage of location, personalization and timeliness. I’m not sure that argument holds water. Those definitely are pluses for wireless, but there has to be something more–a real hook to get folks such as Buhr and Stiphout to buy things.

Based on the Boulder trial, conducted by SkyGo Inc. of Redwood City, Calif., and other trials, ticketing indeed appears to have enough value to consumers that they’ll accept wireless ads.

WindWire Inc., a wireless advertising service provider based in Research Triangle Park, N.C., conducted a campaign for the Carolina Hurricanes of the National Hockey League last fall. The campaign included $5 off a Hurricanes ticket purchased through TicketMaster. Over a two-month period, consumers who received the ads had a 13 percent response rate (their response was via a voice call because the Hurricanes didn’t have a WAP site). That compares to a 6 percent response rate in a broader trial by wireless ad agency fusionOne of San Jose, Calif. SkyGo reported a 15 percent response rate, but based on actual or “planned” action.

By comparison, a study by Forrester Research says the response rate for free coupons in newspapers is 3 percent to 4 percent, direct mail gets 1 percent to 2 percent and consumer catalogs have a 4 percent to 5 percent response rate.

What does all this mean? Perhaps wireless advertising will find an audience, but it is going to have to be focused. I doubt if things like real estate and banking will ever find a place in wireless advertising, but ticketing probably will and so may coupons.
Ultimately the key will be getting con-sumers to accept the ads in the first place. If they don’t, you can kiss goodbye all those rosy forecasts of wireless advertising revenues.

Brad Smith is IP/Data editor at Wireless Week. Readers (and wireless advertisers) can contact him at bsmith@cahners.com.