Blyk, the ad-funded MVNO for 16-24 year-olds has been in the news lately a lot. The trigger was a piece by NMA according to which Blyk had announced it would scrap its consumer offering and concentrate on selling its technology/concept/both to other operators. This was quickly refuted by Blyk. The "final" position appears to being a little unclear.
Now, quite a while ago, I issued concerns about the viability of their business model as a stand-alone ad-funded MVNO (see here), and I stand by it (even if they have varied their model a little recently: from 217 free messages and 43 minutes of free calls per month to a £15 discount voucher). If they now claim that this was "only" a proof of concept, I must say that this smacks more than a bit of hopeful PR although this may just be semantics:
The pitfalls of an MVNO-only model aside, their approach is rather intriguing: if you can segment the market as they do and thus create consumer (or people) clusters that are much more homogenous than most media will be able to assemble (18-49-year-olds anyone?), you have a fairly powerful opportunity to interact with your people more directly, more intensely and - most importantly - more relevant messages than you otherwise could. And this has value, and lots of it!
Combine this now with the headaches of your ordinary operator, of which the biggest one probably (still) is churn. I am lacking current accurate numbers but, historically, an operator's churn rate (the percentage of users it would lose in 12 months) was up to 1/3. And this is painful, very painful! So get a tool that allows to reduce that churn significantly and you're off to the races. Combine this with a (functioning because highly targeted) advertising model and you can even increase your margins on this model. Sounds good? Certainly does to me!
And so it is not a big surprise that other operators are said to have shown a lot of interest in the model. Vodafone, for one, have had their own advertising-related announcement in the last week, and the use of Blyk's model and expertise could be quite compelling to them (as some voices already suggest). From Blyk's point of view, such a model is also easier and more quickly scalable than a stand-alone expansion and it should therefore greatly aid Blyk to build the critical mass it needs to stay (or become) relevant to advertisers.
It might still fly, you know...
Image credit: http://asetcenter.net/images/article/mobile_adv.jpg