Last week, Orange announced it was taking over Blyk’s ad-funded MVNO, and launched its new ‘Monkey’ prepay tariff one day later.
Blyk admitted it struggled to find scale in the UK because it had not managed to get enough consumers on board to make its service relevant to advertisers. However, where Blyk failed, Orange has seen potential to provide targeted advertising to its 15 million customers. Young people who used Blyk had to opt in to the service, but Orange is offering an actual tariff to lock in customers, with the potential to launch other targeted tariffs across its entire customer base.
Orange’s prepay Monkey tariff, which is a partnership between the network, Universal Music and 4Music, allows prepay customers to stream music for free when they make a minimum top-up of £10 per month. The service allows customers with low-end phones to listen to, create and share playlists on the web, and they will also be sent adverts. Like Blyk, it is aimed at 16 to 24 year olds.
Meanwhile, a dedicated website with content from 4Music went live on 30 June, creating a community for users to share music. They will also have access to competitions and artist interviews.
And this could only be the start. Orange is keen to offer targeted advertising to all of its 15 million UK customers, across all segments, at both the high and low end. The network will offer the advertising alongside free services such as music and film, looking at different age groups, and it is likely a contract offer will soon follow.
One source at Orange tells Mobile: ‘Advertising is too bland a term; it is targeted, and expected.’ He adds: ‘We are looking into as many segments as we can.’
Orange’s wholesales and new business chief, Marc Overton, has described it as ‘game changing’, and it certainly puts Orange ahead of O2, which recently poached former Blyk UK chief Shaun Gregory. Meanwhile, Vodafone appears to have disbanded its efforts on mobile advertising that appeared a priority for around three years.
Overton says: ‘Over the past couple of years we’ve looked at mobile advertising and what Blyk has done. We’ve been somewhat jealous to be honest.’
He highlights Blyk’s capability, specialist skills and links into the advertising brands and agencies. ‘You’ll hear operators saying they can do this, but without the capability, there is nothing you can do other than just repurpose adverts,’ Overton adds.
Orange expects its deal with Blyk to act as a catalyst for its advertising ambitions, with the aim of adding new customers, improving its retention with a new segment of the market and to start building a new revenue stream.
It also represents a move by Orange to chip away at an area of the market where it feels it can be the best in the industry, and potentially start hurting O2’s domination. The teenage to young 20s market is Orange’s heritage – and one O2 has taken in recent years through prepay and branding.
Overton suggests the Monkey tariff is simply the start of its ambitions for the sector. ‘We want scale and offer an enhanced, differentiated proposition. We know we can provide an improved service of offers, benefits and content all tailored to the customer. We also have a strategic relationship with Barclays – the vision is that customers will be sent targeted adverts and be able to make purchases from their phone.’
The advertising market is in a state of economic and structural change, with the downturn in consumer spending only exacerbating the shift away from clunky forms of advertising such as TV and print.
Instead, advertisers, brands and agencies are finding digital channels a far more transparent method of monitoring the effectiveness of adverts and the link between purchasing and adverts. They also offer clearer segmentation of consumers and, more simply, it is where more people are spending more time.
Mobile advertising is seen as the logical extension of that; even more people, spending even more time. Furthermore, it allows greater targeting of customers and it is easier to create what Overton calls ‘a dialogue with customers’.
Offers for older, high spending customers could include premium services, with ‘VIP’ content. Orange could potentially make a lot of money from advertisers – it already has a team in place – but only if the service works.
Blyk said its problem was that it was struggling with scale – while Orange feels it can bring the offering to market quickly and to more people.
Orange was previously Blyk’s UK wholesale partner, but will now be its exclusive partner [it is Vodafone’s partner in Holland], signalling the effective collapse of Blyk as a standalone virtual network.
Orange is now hoping to be in the ascendancy of mobile advertising, targeting customers with ‘relevant’ ads in the form of picture and text messages.
And this is not Orange’s first foray into mobile advertising. The network claims it was the first to try mobile advertising in 2006, via its online portal.
The industry is split over Orange’s move. While some say it gives the network a service to differentiate itself, others feel a Blyk-type service is too niche to ever make revenues.
Will it work?
The pessimist – John Strand, Strand Consultants CEO
When Blyk launched I said it would never work, and it went how I predicted.
The challenge is how you monitor costs with your advertising sales. Blyk had no understanding of the advertising market, and a lot of money went into it.
The whole concept was a problem. Blyk was offering its customers one of the most expensive marketing channels in the world – and it couldn’t deliver the coverage.
An operator of Orange’s size has to test things, and Orange has done some things well, but some things badly. This will not be a sustainable business case.
A huge number of Orange’s customers are prepay, but 13 to 16 year olds, for example, cannot be easily identified as the contract will be in the parent’s name.
All Orange knows about advertising is how to buy it, not how to sell it, and giving music away is nothing new. It’s how to make money from these services. It had Orange World – that was supposed to be big. Things never fail at Orange – they just fade away.
Paolo Pescatore, CCS Insight director of operator strategy
We will see growth in ad-funded content and this is the first real drive we have seen on a pay as you go device.
Music appeals so greatly to the younger demographic, and a key feature of the Monkey tariff is legalising music. But what will consumers think about music that is ad-funded?
If this is a success, it will move to other services, but if everything is ad-funded, then everyone will expect it to be free.
It is novel that Orange is embracing a new business model, and that Channel 4 is evolving to embrace mobile. It is also a great way of breaking down the barriers of cost.
Differentiating through pay as you go reinforces how competitive the UK market is. Services can be used to create a distinction and I think other networks will look to services to set themselves apart.
Orange has had a certain degree of success, if you look at its digital media offering. It needs to make sure the adverts are relevant, but I wonder if people will gravitate towards this as their primary device.