Unlockd Tests New Business Model for Mobile Ads

What will be the ROI on mobile advertising? Nobody knows yet. It’s still too new, and only now is beginning to attract the percentage of ad dollars that it should have, given the way consumers spend their time.. But here’s an intriguing new business model for mobile advertisers and operators hoping to lure consumers reluctant to deal with mobile ads:  convince consumers to unlock their phones to receive ads and either lower their monthly carrier payments or receive a discount on a new phone. This would appear to the naked eye to create a value for value exchange, but one that is easier for the consumer to recognize as valuable oh her end.

A new company called Unlockd, founded in Australia last year,  has launched in both the US and the UK hoping to make a global success with that model. The startup is already partnered with Sprint in the US and Tesco Mobile in the U.K.

Last month Unlockd released the results of a new survey it conducted among 100 advertisers, 100 operators, and 1000 consumers. Not surprisingly, the survey revealed an almost complete disconnect between advertisers, operators and consumers. The third-party study found

that while 84 per cent of advertisers and 82 per cent of mobile operators believe they are delivering a positive experience, only 47 per cent of consumers consider their mobile advertising experience to be positive.The report found that 39 per cent of consumers think mobile ads are irrelevant to them, highlighting the lack of understanding by the industry of the consumer experience they’re providing. Key contributing factors leading to the negative experience were volume (40 per cent) and irritating format (39 per cent) of ads.

However, despite the irrelevance and irritation, half of all 16-44 year olds were willing to accept the advertising experience in return for reduced rates or reward points toward a new phone. They are paid a flat fee for participation in the program, with no further responsibility to engage with the ads. We can see how this might be appealing to a customer who is on the lookout for cost savings.

But we have several remaining questions, the most important of which is whether this is really a sustainable model. Could this be something college students would sign up for on a short term basis, only to reject when they realize there are no frequency caps on the ads and they might see as many as 30-35 ads a day? Might people just tough it out until they accumulated enough points for a new phone and then dump the plan for one where they have more choice? And perhaps most important, are these the customers brands really want?

Kudos to Unlockd for offering consumers a choice, and to advertisers for recognizing that consumers don’t sign on to their mobile phones simply to receive ads.