When the Value Exchange Doesn’t Add Up

MLaw Tesco PortraitFor the past 12 months, most of the debate around digital advertising has centred on the growth of ad blocking in which consumers, fed up with waiting ages for ad- and tag-heavy pages to load, deploy a piece of software to prevent ads from being shown. Recent figures from PageFair show that 22 per cent of the world’s 1.9bn smartphone users are currently blocking ads on the mobile web, which shows the scale of the problem.

But the news that caught my eye this week was not around people choosing to block ads but rather, just the opposite, those who actively invite them in to their lives, for a small fee. Last Thursday, Tesco Mobile, the mobile virtual network operator, launched Tesco Mobile Xtras, in partnership with Australian firm Unlockd, which has launched similar programs with Boost in the US and Lebara in Australia.

Tesco Mobile customers who opt in to the program will see an ad, on average, every third time they unlock their phone. Unlockd CEO Matt Berriman told me that in typical usage, it would equate to 30 – 35 ads per day. For agreeing to receive these ads on their phone, customers will get £3 off their monthly bill. Or to put it another way, one third of a penny for each ad displayed. It’s a flat fee; there’s no more money dependent on whether you click on the ad or not, so at least advertisers know that people are not being incentivised to click on the ad for the wrong reasons.

Berriman, and Tesco Mobile CEO Anthony Vollmer, were both very candid in explaining how the programme works. They have even gone to the lengths of giving customers who opt in to the program an additional 200MB of data each month to cater for the ad downloads, so the whole thing has clearly been thought through. Berriman also accepted the point I put to him that others have tried and failed to do what Unlockd and Tesco Mobile are trying to do, and pointed to programmatic as a key factor in their favour, since it would reduce the need for a large sales team and enable the company to scale in a way which others before it – most notably Blyk, had been unable to.

It all sounds perfectly plausible in theory, but there’s just one area where the Tesco Mobile deal doesn’t stack up, in the way that Blyk, Ovivo and Samba Mobile – to name but three – also didn’t stack up: the value exchange.

Ovivo, which closed its doors in March 2014, offered users free airtime in exchange for watching an ad every 10 minutes. Samba Mobile, which shuttered operations a month later, gave its customers between 3.5–7 MB of data for each ad they viewed, limited only by the amount of available ads on the network. And Blyk, the poster child for this sort of thing, offered its customers 217 texts and 43 minutes of calls each month (in the days before mobile data was a thing) in return for agreeing to receive what looks like a very reasonable maximum of six marketing messages per day on their phone. Even so, Blyk failed to achieve sufficient traction and closed its doors in the UK in 2009.

Now consider the Tesco Mobile Xtras deal. As explained by Berriman, opted-in users are looking at (literally) around 30 ads per day on that most personal of devices, their mobile phone. By my maths, that’s 900 ads per month. For which they get £3 off their bill.

OK so they are not being paid to look at the ads, only to receive them, but seriously, is a group of mobile users willing to put up with 900 ads on their phone every month in return for £3 a segment many brands are keen on targeting?

Apparently so, if you look at the line up of brands using the service at launch, which includes British Airways, McDonalds and Doritos. Time may prove me wrong, but if advertising is about a value exchange, then the value here seems firmly stacked in favour of the advertiser. Unless the volume of ads the users receive is drastically reduced, I can’t see this program having any more legs than Blyk or any of the other failed attempts to make an ads-for-cash scheme work.