Wi-Fi, Sponsored By...New Firms Broker Bundled Ad Sales For 'Free' Networks
Wall Street Journal
Jul 31, 2007
By Emily Steel
It seemed like a good idea at the time. In the past couple of years, hundreds of towns across America have set up free wireless Internet networks for public use, hoping to improve life for residents and draw businesses. In most cases, town officials assumed the sale of ad space on the networks would offset the cost of operating the networks.
But luring advertisers has proved harder than expected, forcing some towns to delay their wireless plans. The major problem: Big marketers considering a wireless network ad deal would need to negotiate numerous, town-by-town agreements to reach a significant number of people. That's a logistical headache most marketers prefer to avoid.
All is not lost, however. A new generation of ad firms is starting to crop up, aiming to bundle together ad space on numerous local Wi-Fi wireless Internet networks throughout the country for sale to marketers. Some in the industry say these new firms may get the development of town-operated free Wi-Fi services back on track.
"It gives us one place to go to or a few places rather than 100 places to go to," says Jeremy Lockhorn, director of emerging media for Avenue A/Razorfish. "Our advertisers want a high level of targeting, but they also want some scale behind it. Working with a network like that also provides some scale."
Advertisers have good reason to consider buying space on local Wi-Fi networks. While the Web generally is swamped with ads, Wi-Fi networks offer marketers the ability to buy space on key positions such as the welcome page seen by Web surfers when they first log on. (Most networks give users the option of paying for the Internet connection and skipping the ad, although some local network operators say most people agree to watch the ads).
Wi-Fi networks enable ads targeted to specific geographic locations.
What's more, Wi-Fi networks enable marketers to reach consumers on the go with ads targeted to specific geographic locations. So far, though, the Wi-Fi networks that have mostly drawn big advertisers are those operated by airports and hotels, which give marketers the chance to reach business travelers.
Brokerage firm Charles Schwab, for example, has bought ads on wireless hubs at more than a dozen airports. The ads, which complement other Schwab ads at the airports, have outperformed other online ads, prompting the company to advertise through hotel Wi-Fi connections as well, says Mike Naughton, vice president of media at Charles Schwab.
Similarly, Dell this year started running ads on wireless networks at airports and hotels. "Our customers more and more are going mobile with their business and their day-to-day activities," says Tom West, director of marketing for Dell. "Our ability to use some of these hot-spot connection points to connect with them seems like a great path."
In contrast, municipal Wi-Fi networks have so far mostly sold ad space to local businesses that previously went through other local avenues, such as the local newspaper or the Yellow Pages.
Enter ad firms like JiWire, which already sell ad space on airport and hotel hubs and are now expanding into municipal hubs. JiWire, a San Francisco firm that put together the Dell deal, among others, recently linked up with Microsoft in a deal to sell ads supporting free municipal Wi-Fi connections in Portland, Ore., and Oakland County in Michigan.
MichTel Communications, which operates the Oakland County network on behalf of the local government, says the deal will give it access to national ad dollars that could provide the major revenue source for the network. "It would have been impossible to go it alone," says Gary Greenberg, vice president of business development at MichTel. "All along we knew that what we'd have to do is get a partner."
Some marketing executives remain cautious about the advertising potential of municipal Wi-Fi networks, noting that when a person agrees to watch an ad in order to tap into the Internet, there's no guarantee they're paying attention to the ad.
"People have become almost numb to it. They realize the ad is there, but it is almost a price they have to pay to get the free access," says Carl Fremont, executive vice president and global media director at Digitas, a digital-marketing concern owned by ad-holding company Publicis Group.
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