Wireless advertising minus the banner

There has been much criticism of wireless advertising. Will it be more effective than banner ads via the wired Internet? Will it sour consumers on the wireless Internet?

Wireless marketing company SkyGo last week announced the results of its advertising study, which surprised some in the industry. The company found that permission-based alerts delivered via wireless phones capture consumer attention, drive them to action and build brand awareness.

As part of SkyGo's four-month study that ended Jan. 31, the company created more than 550 advertising campaigns and delivered more than 500,000 ad alerts to 1000 Boulder, Colo.-based participants. Because wireless application protocol (WAP) has not taken off as much in the U.S. as in other countries, SkyGo believed this type of study could demonstrate the potential of wireless marketing and its ability to increase brand awareness, said Daren Tsui, CEO of SkyGo.

Participants had the option to receive at least three advertisements each day, all of which were distributed when users wanted them. In the end, some participants demand more, Tsui said. The company found that participants responded to 64% of the ads delivered to them as WAP alerts.

“We all are bullish about wireless advertising, based on the fact that the growth of the [wired] Internet was due, in part, to [the advertising industry] subsidizing free content and services,” Tsui said. “Ad subsidization will drive the growth of the wireless Internet.”

The study included about 50 local and national merchants, some of which included Subway and J.C. Penney. The ads featured the option to click and answer interactive trivia, participate in polls, register for some kind of newsletter or service and e-mail information to other online accounts. Although many people were responsive to advertising, location technology may need to be more prevalent for this type of marketing to flourish and attract bigger players, said a spokesman with AT&T Wireless, whose PocketNet network was used for the trial.

“Location-based services will be key in providing any kind of service,” the spokesman said. “The whole area of wireless data is in its infancy, but this kind of service eventually might solve the puzzle in getting people to use it.”

SkyGo currently is talking with U.S. wireless carriers about its marketing program, hoping to help them generate additional revenue, Tsui said.

“We also can help them reduce churn,” he said.

For instance, the company might create royalty programs within its marketing program, whereby it could track how many times a certain Web site is viewed, offering awards to the consumers going to it the most. By providing this value-add for content providers and wireless carriers, the company believes consumers might be more willing to return, Tsui said.

At this point, U.S. carriers are cautious, Tsui said. Still, the company says it is talking with several carriers about conducting service trials.

Sprint PCS plans to do some wireless advertising trials in the near future.

“While we believe in advertising, we feel big value comes from a very targeted advertising model,” said Bryan McCann, vice president of wireless data services at Sprint PCS. “Location-based technology will make it the most compelling.”

The carrier claims it has researched several different advertising models similar to those used by SkyGo.

But the trial results shocked McCann, who is used to hearing that consumers would revolt against wireless advertising.

Companies in the wireless marketing space, such as SkyGo, WindWire and others, could add incremental value for retailers and carriers because they can aggregate the content for both sides, McCann said.

“This is an interesting space that will move wireless data,” said Gary Ozanich, senior analyst at The Kelsey Group. When wireless advertising is location-based, it could become more effective than television ads or newspaper ads, he said.